Exhibit 10.02



               F A C I L I T Y   L E A S E   A G R E E M E N T





                  DESERT AMETHYST PHASE II LIMITED PARTNERSHIP

                                       as
                                     Lessor


                                       AND


                   CAREMATRIX OF THE INN AT THE AMETHYST, INC.

                                       as
                                     Lessee



                           Dated as of March 16, 1998


                             For Premises Located At

                             18172 North 91st Avenue
                                Peoria, AZ 85832




<PAGE>



                                TABLE OF CONTENTS

<TABLE>
<S>               <C>                                                                                           <C>

ARTICLE 1         LEASED PROPERTY; TERM; CONSTRUCTION; EXTENSIONS.................................................1
         1.1      Leased Property.................................................................................1
         1.2      Term............................................................................................2
         1.3      Extended Terms..................................................................................2

ARTICLE 2         DEFINITIONS AND RULES OF CONSTRUCTION...........................................................2
         2.1      Definitions.....................................................................................2
         2.2      Rules of Construction..........................................................................18

ARTICLE 3         RENT...........................................................................................18
         3.1      Rent for Land, Leased Improvements, Related Rights and Fixtures................................18
         3.2      Additional Rent.  .............................................................................19
         3.3      Additional Charges.............................................................................20
         3.4      Net Lease......................................................................................20
         3.5      No Lessee Termination or Offset................................................................20
                  3.5.1    No Termination........................................................................20
                  3.5.2    Waiver................................................................................21
                  3.5.3    Independent Covenants.................................................................21
         3.6      Abatement of Rent Limited......................................................................21

ARTICLE 4         IMPOSITIONS; TAXES; UTILITIES; INSURANCE PAYMENTS..............................................22
         4.1      Payment of Impositions.........................................................................22
                  4.1.1    Lessee To Pay.........................................................................22
                  4.1.2    Installment Elections.................................................................22
                  4.1.3    Returns and Reports...................................................................22
                  4.1.4    Refunds...............................................................................23
                  4.1.5    Protest...............................................................................23
         4.2      Notice of Impositions..........................................................................23
         4.3      Adjustment of Impositions......................................................................23
         4.4      Utility Charges................................................................................23
         4.5      Insurance Premiums.............................................................................23

ARTICLE 5         OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY;
                  INSTALLATION, REMOVAL AND REPLACEMENT OF
                  PERSONAL PROPERTY..............................................................................24
         5.1      Ownership of the Leased Property...............................................................24
         5.2      Personal Property; Removal and Replacement of Personal Property................................24
                  5.2.1    Lessee To Equip Facility..............................................................24
                  5.2.2    Sufficient Personal Property..........................................................24
                  5.2.3    Removal and Replacement; Lessor's Option to Purchase..................................24


                                       (i)

<PAGE>



ARTICLE 6         SECURITY FOR LEASE OBLIGATIONS.................................................................25
         6.1      Security for Lessee's Obligations..............................................................25
                  6.1.1    Security..............................................................................25
                  6.1.2    Purchase-Money Security Interests and Equipment Leases................................25

ARTICLE 7         CONDITION AND USE OF LEASED PROPERTY;
                  MANAGEMENT AGREEMENTS..........................................................................26
         7.1      Condition of the Leased Property...............................................................26
         7.2      Use of the Leased Property; Compliance; Management.............................................26
                  7.2.1    Obligation to Operate.................................................................26
                  7.2.2    Permitted Uses........................................................................26
                  7.2.3    Compliance With Insurance Requirements................................................26
                  7.2.4    No Waste..............................................................................27
                  7.2.5    No Impairment.........................................................................27
                  7.2.6    No Liens..............................................................................27
         7.3      Compliance with Legal Requirements.............................................................27
         7.4      Management Agreements..........................................................................27

ARTICLE 8         REPAIRS; RESTRICTIONS..........................................................................29
         8.1      Maintenance and Repair.........................................................................29
                  8.1.1  Lessee's Responsibility.................................................................29
                  8.1.2  No Lessor Obligation....................................................................30
                  8.1.3  Lessee May Not Obligate Lessor..........................................................30

ARTICLE 9         MATERIAL STRUCTURAL WORK AND CAPITAL ADDITIONS.................................................30
         9.1      Lessor's Approval..............................................................................30
         9.2      General Provisions as to Capital Additions and Certain Material Structural
                  Work...........................................................................................30
                  9.2.1    No Liens..............................................................................31
                  9.2.2    Lessee's Proposal Regarding Capital Additions and Material
                           Structural Work.......................................................................31
                  9.2.3    Lessor's Options Regarding Capital Additions and Material
                           Structural Work.......................................................................31
                  9.2.4    Lessor May Elect to Finance Capital Additions or Material
                           Structural Work.......................................................................31
         9.3      Capital Additions and Material Structural Work Financed by Lessor..............................31
                  9.3.1    Lessee's Financing Request............................................................31
                  9.3.2    Lessor's General Requirements.........................................................32
                  9.3.3    Payment of Costs......................................................................33
         9.4      General Limitations............................................................................34
         9.5      Non-Capital Additions..........................................................................34


                                      (ii)

<PAGE>


ARTICLE 10        WARRANTIES AND REPRESENTATIONS.................................................................35
         10.1     Representations and Warranties.................................................................35
                  10.1.1   Existence; Power; Qualification.......................................................35
                  10.1.2   Valid and Binding.....................................................................35
                  10.1.3   Single Purpose........................................................................35
                  10.1.4   No Violation..........................................................................35
                  10.1.5   Consents and Approvals................................................................35
                  10.1.6   No Liens or Insolvency Proceedings....................................................36
                  10.1.7   No Burdensome Agreements..............................................................36
                  10.1.8   Commercial Acts.......................................................................36
                  10.1.9   Adequate Capital, Not Insolvent.......................................................36
                  10.1.10      Not Delinquent....................................................................36
                  10.1.11      No Affiliate Debt.................................................................36
                  10.1.12      Taxes Current.....................................................................37
                  10.1.13      Financials Complete and Accurate..................................................37
                  10.1.14      Pending Actions, Notices and Reports..............................................37
                  10.1.15      Compliance with Legal and Other Requirements......................................37
                  10.1.16      ERISA.............................................................................37
                  10.1.17      No Broker.........................................................................37
                  10.1.18      No Improper Payments..............................................................38
                  10.1.19      Nothing Omitted...................................................................38
                  10.1.20      No Default........................................................................38
                  10.1.21      Principal Place of Business.......................................................38
                  10.1.22      Management Agreements.............................................................38
         10.2     Continuing Effect of Representations and Warranties............................................38

ARTICLE 11        FINANCIAL AND OTHER COVENANTS..................................................................39
         11.1     Status Certificates............................................................................39
         11.2     Financial Statements; Reports; Notice and Information..........................................39
                  11.2.1   Obligation To Furnish.................................................................39
                  11.2.2   Responsible Officer...................................................................41
                  11.2.3   No Material Omission..................................................................42
                  11.2.4   Confidentiality.......................................................................42
         11.3     Affirmative Covenants..........................................................................42
                  11.3.1   Maintenance of Existence..............................................................42
                  11.3.2   Materials.............................................................................43
                  11.3.3   Compliance With Legal Requirements And Applicable Agreements..........................43
                  11.3.4   Books And Records.....................................................................43
                  11.3.5   Conduct of its Business...............................................................43
                  11.3.6   Address...............................................................................44
                  11.3.7   Subordination of Affiliate Transactions...............................................44
                  11.3.8   Inspection............................................................................44
                  11.3.9   HUD Financing Documents...............................................................44


                                      (iii)

<PAGE>


         11.4     Additional Negative Covenants..................................................................45
                  11.4.1   Restrictions Relating to Lessee.......................................................45
                  11.4.2   No Liens..............................................................................45
                  11.4.3   Limits on Affiliate Transactions......................................................45
                  11.4.4   No Default............................................................................46
                  11.4.5   ERISA.................................................................................46
                  11.4.6   Forgiveness of Indebtedness...........................................................46
                  11.4.7   Value of Assets.......................................................................46
                  11.4.8   Changes in Fiscal Year and Accounting Procedures......................................46

ARTICLE 12        INSURANCE AND INDEMNITY........................................................................46
         12.1     General Insurance Requirements.................................................................46
                  12.1.1   Types and Amounts of Insurance........................................................46
                  12.1.2   Insurance Company Requirements........................................................47
                  12.1.3   Policy Requirements...................................................................48
                  12.1.4   Notices; Certificates and Policies....................................................48
                  12.1.5   Lessor's Right to Place Insurance.....................................................49
                  12.1.6   Payment of Proceeds...................................................................49
                  12.1.7   Irrevocable Power of Attorney.........................................................49
                  12.1.8   Blanket Policies......................................................................49
                  12.1.9   No Separate Insurance.................................................................50
                  12.1.10      Assignment of Unearned Premiums...................................................50
         12.2     Indemnity......................................................................................50
                  12.2.1   Indemnification.......................................................................50
                  12.2.2   Indemnified Parties...................................................................51
                  12.2.3   Limitation on Lessor Liability........................................................51
                  12.2.4   Risk of Loss..........................................................................51

ARTICLE 13        FIRE AND CASUALTY..............................................................................52
         13.1     Restoration Following Fire or Other Casualty...................................................52
                  13.1.1   Following Fire or Casualty............................................................52
                  13.1.2   Procedures............................................................................52
                  13.1.3   Disbursement of Insurance Proceeds....................................................53
         13.2     Disposition of Insurance Proceeds..............................................................57
                  13.2.1   Proceeds To Be Released to Pay For Work...............................................57
                  13.2.2   Proceeds Not To Be Released...........................................................57
                  13.2.3   Lessee Responsible for Short-Fall.....................................................58
         13.3     Tangible Personal Property.....................................................................58
         13.4     Restoration of Certain Improvements and the Tangible Personal Property.........................59
         13.5     No Abatement of Rent...........................................................................59
         13.6     Termination of Certain Rights..................................................................59
         13.7     Waiver.........................................................................................59
         13.8     Application of Rent Loss and/or Business Interruption Insurance................................59
         13.9     Obligation To Account..........................................................................60


                                      (iv)

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ARTICLE 14        CONDEMNATION...................................................................................60
         14.1     Parties' Rights and Obligations................................................................60
         14.2     Total Taking...................................................................................60
         14.3     Partial or Temporary Taking....................................................................60
         14.4     Restoration....................................................................................61
         14.5     Award Distribution.............................................................................62
         14.6     Control of Proceedings.........................................................................62

ARTICLE 15        PERMITTED CONTESTS.............................................................................62
         15.1     Lessee's Right to Contest......................................................................62
         15.2     Lessor's Cooperation...........................................................................63
         15.3     Lessee's Indemnity.............................................................................63

ARTICLE 16        DEFAULT........................................................................................63
         16.1     Events of Default..............................................................................63
         16.2     Remedies.......................................................................................65
         16.3     Damages........................................................................................66
         16.4     Lessee Waivers.................................................................................67
         16.5     Application of Funds...........................................................................67
         16.6     Lessor's Right to Cure.........................................................................67
         16.7     No Waiver By Lessor............................................................................67
         16.8     Right of Forbearance...........................................................................68
         16.9     Cumulative Remedies............................................................................68

ARTICLE 17        SURRENDER OF LEASED PROPERTY OR LEASE; HOLDING OVER............................................69
         17.1     Surrender......................................................................................69
         17.2     Transfer of Permits and Contracts..............................................................69
         17.3     No Acceptance of Surrender.....................................................................70
         17.4     Holding Over...................................................................................70

ARTICLE 18        PURCHASE OF THE LEASED PROPERTY................................................................70
         18.1     Purchase of the Leased Property................................................................70
         18.2     Appraisal......................................................................................71
                  18.2.1   Designation of Appraisers.............................................................71
                  18.2.2   Appraisal Process.....................................................................71
                  18.2.3   Specific Enforcement and Costs........................................................72
         18.3     Lessee's Option to Purchase....................................................................72
                  18.3.1   Conditions to Option..................................................................72
                  18.3.2   Exercise of Option....................................................................72
                  18.3.3   Conveyance............................................................................73
                  18.3.4   Calculation of Purchase Price.........................................................73
                  18.3.5   Payment of Purchase Price.............................................................73
                  18.3.6   Place and Time of Closing.............................................................73
                  18.3.7   Condition of Leased Property..........................................................73


                                       (v)

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                  18.3.8   Quality of Title......................................................................73
                  18.3.9   Lessor's Inability to Perform.........................................................73
                  18.3.10  Merger by Deed........................................................................74
                  18.3.11  Use of Purchase Price to Clear Title..................................................74
                  18.3.12  Lessee's Default......................................................................74
                                                                            
ARTICLE 19        SUBLETTING AND ASSIGNMENT......................................................................74
         19.1     Subletting and Assignment......................................................................74
         19.2     Permitted Subleases............................................................................75
         19.3     Attornment.....................................................................................75
         19.4     Permitted Transfers............................................................................75

ARTICLE 20        TITLE TRANSFERS AND LIENS GRANTED BY LESSOR....................................................75
         20.1     No Merger of Title.............................................................................75
         20.2     Transfers By Lessor............................................................................76
         20.3     Lessor May Grant Liens.........................................................................76
         20.4     Subordination and Non-Disturbance..............................................................76

ARTICLE 21        LESSOR OBLIGATIONS.............................................................................77
         21.1     Quiet Enjoyment................................................................................77
         21.2     Memorandum of Lease............................................................................77
         21.3     Default by Lessor..............................................................................78

ARTICLE 22        NOTICES........................................................................................78

ARTICLE 23        ENVIRONMENTAL MATTERS..........................................................................79
         23.1     Maintenance of Leased Property.................................................................79
         23.2     Notice of Environmental Conditions.............................................................80
         23.3     The Lessee's Agreement To Take Remedial Actions................................................80
         23.4     The Lessor's Rights To Inspect The Leased Property and Take Remedial
                  Actions........................................................................................80
         23.5     Environmental Indemnification..................................................................82
         23.6     Survival.......................................................................................82

ARTICLE 24        MISCELLANEOUS PROVISIONS.......................................................................83
         24.1     Broker's Fee Indemnification...................................................................83
         24.2     No Joint Venture or Partnership................................................................83
         24.3     Amendments, Waivers and Modifications..........................................................83
         24.4     Captions and Headings..........................................................................84
         24.5     Time is of the Essence.........................................................................84
         24.6     Counterparts...................................................................................84
         24.7     Entire Agreement...............................................................................84
         24.8     WAIVER OF JURY TRIAL...........................................................................84
         24.9     Successors and Assigns.........................................................................85


                                      (vi)

<PAGE>


         24.10    No Third Party Beneficiaries...................................................................85
         24.11    Governing Law..................................................................................85
         24.12    General........................................................................................86
         24.13    Consents.......................................................................................86
         24.14    HUD Regulatory Agreements......................................................................87


EXHIBIT A         LEGAL DESCRIPTION OF THE LAND
EXHIBIT B         PERMITTED ENCUMBRANCES
</TABLE>


                                      (vii)

<PAGE>


                            FACILITY LEASE AGREEMENT


         This FACILITY LEASE AGREEMENT ("Lease") is dated as of the 16th day of
March, 1998 and is between Desert Amethyst Phase II Limited Partnership (the
"Lessor"), an Arizona limited partnership, having its principal office at 2221
East Broadway, Suite 211, Tucson, AZ 85719, and CareMatrix of the Inn at the
Amethyst, Inc. (the "Lessee"), a Delaware corporation, having its principal
office at 197 First Avenue, Needham, Massachusetts 02194.


                                    ARTICLE 1
                                    ---------

                 LEASED PROPERTY; TERM; CONSTRUCTION; EXTENSIONS
                 -----------------------------------------------

         1.1 Leased Property. Upon and subject to the terms and conditions
hereinafter set forth, the Lessor leases to the Lessee and the Lessee rents and
leases from the Lessor all of the Lessor's rights and interests in and to the
following real and personal property (collectively, the "Leased Property"):

         (a) the real property described in EXHIBIT A attached hereto (the
"Land");

         (b) all buildings, structures, Fixtures (as hereinafter defined) and
other improvements of every kind including, but not limited to, alleyways and
connecting tunnels, sidewalks, utility pipes, conduits and lines, and parking
areas and roadways appurtenant to such buildings and structures presently or
hereafter situated upon the Land (collectively, the "Leased Improvements");

         (c) all easements, rights and appurtenances of every nature and
description now or hereafter relating to or benefiting any or all of the Land
and the Leased Improvements; and

         (d) all equipment, machinery, building fixtures, and other items of
property (whether realty, personalty or mixed), including all components
thereof, now or hereafter located in, on or used in connection with, and
permanently affixed to or incorporated into the Leased Improvements, including,
without limitation, all furnaces, boilers, heaters, electrical equipment,
heating, plumbing, lighting, ventilating, refrigerating, incineration, air and
water pollution control, waste disposal, air-cooling and air-conditioning
systems and apparatus, sprinkler systems and fire and theft protection
equipment, and built-in oxygen and vacuum systems, all of which, to the greatest
extent permitted by law, are hereby deemed by the parties hereto to constitute
real estate, together with all replacements, modifications, alterations and
additions thereto, but specifically excluding all items included within the
category of Tangible Personal Property (as hereinafter defined) which are not
permanently affixed to or incorporated in the Leased Property (collectively, the
"Fixtures"); and


<PAGE>


         (e) Lessor's Personal Property.

         The Leased Property is leased in its present condition, AS IS, without
representation or warranty of any kind, express or implied, by the Lessor and
subject to: (i) the rights of parties in possession; (ii) the existing state of
title including all covenants, conditions, Liens (as hereinafter defined) and
other matters of record (including, without limitation, the matters set forth in
EXHIBIT B); (iii) all applicable laws and (iv) all matters, whether or not of a
similar nature, which would be disclosed by an inspection of the Leased Property
or by an accurate survey thereof.

         1.2 Term. The term of this Lease shall consist of: the "Initial Term",
which shall commence on March 16, 1998 (the "Commencement Date") and end on
March 15, 2013 (the "Expiration Date"); provided, however, that this Lease may
be sooner terminated as hereinafter provided. In addition, the Lessee shall have
the options to extend the Term (as hereinafter defined) as provided for in
Section 1.3.

         1.3 Extended Terms. Provided that this Lease has not been previously
terminated, and as long as there exists no Lease Default (as hereinafter
defined) at the time of exercise and on the last day of the Initial Term or the
then current Extended Term (as hereinafter defined), as the case may be, the
Lessee is hereby granted the options to extend the Initial Term of this Lease
for three (3) additional periods (collectively, the "Extended Terms") as
follows: three (3) successive five (5) year periods for a maximum Term, if all
such options are exercised, which ends on March 15, 2028. The Lessee's extension
options shall be exercised by the Lessee by giving written notice to the Lessor
of each such extension at least one hundred eighty (180) days, but not more than
three hundred sixty (360) days, prior to the termination of the Initial Term or
the then current Extended Term, as the case may be. The Lessee shall have no
right to rescind any such notice once given. The Lessee may not exercise its
option for more than one Extended Term at a time. During each effective Extended
Term, all of the terms and conditions of this Lease shall continue in full force
and effect.


                                    ARTICLE 2
                                    ---------

                      DEFINITIONS AND RULES OF CONSTRUCTION
                      -------------------------------------

         2.1 Definitions. For all purposes of this Lease and the other Lease
Documents (as hereinafter defined), except as otherwise expressly provided or
unless the context otherwise requires, (i) the terms defined in this Article
have the meanings assigned to them in this Article and include the plural as
well as the singular and (ii) all references in this Lease or any of the other
Lease Documents to designated "Articles", "Sections" and other subdivisions are
to the designated Articles, Sections and other subdivisions of this Lease or the
other applicable Lease Document.


                                        2

<PAGE>


         Accounts:  As defined in the UCC.

         Act:  As defined in Section 11.3.

         Additional Debt Service Payments: All payments, other than the Debt
Service Rental Payments, due and payable under any Fee Mortgage Loan Documents,
including, without limitation, all reserves, deposits and other costs, expenses
and charges due and payable thereunder (including, without limitation, any other
costs, expenses and late charges incurred by the Lessor as a result of any
failure by Lessee to satisfy, on a timely basis, the obligations set forth under
Section 3.1 and 3.2), but, specifically excluding any so-called "balloon
payments" due at the maturity any loan evidenced by any Fee Mortgage Loan
Documents and all costs and expenses incurred in connection with any refinancing
thereof.

         Additional Charges: As defined in Article 3.

         Additional HUD Insured Mortgage: That certain Deed of Trust, dated as
of June 25, 1990, granted by the Lessor to Ticor Title Insurance Company for the
benefit of RLM, recorded in the Office of the Maricopa County Recorder in
Document No. 90-282763, as affected by (i) that certain Consolidation and
Modification Agreement, dated as of June 25, 1990, by and between the Lessor,
RLM and the Department, recorded in the Office of the Maricopa County Recorder
in Document No. 90-282764, (ii) that certain Assignment of Deed of Trust, dated
June 27, 1990, from RLM to the HUD Mortgagee, recorded in the Office of the
Maricopa County Recorder in Document No. 90-286786, and (iii) that certain
Modification of Deed of Trust Note and Deed of Trust, dated as of December 15,
1992, by and between the Lessor and the HUD Mortgagee, recorded in Document No.
92-714603.

         Additional Land:  As defined in Section 9.3.

         Additional Rent: As defined in Section 3.2.

         Affiliate: With respect to any Person (i) any other Person which,
directly or indirectly, controls or is controlled by or is under common control
with such Person, (ii) any other Person that owns, beneficially, directly or
indirectly, five percent (5%) or more of the outstanding capital stock, shares
or equity interests of such Person or (iii) any officer, director, employee,
general partner or trustee of such Person, or any other Person controlling,
controlled by, or under common control with, such Person (excluding trustees and
Persons serving in a fiduciary or similar capacity who are not otherwise an
Affiliate of such Person). For the purposes of this definition, "control"
(including the correlative meanings of the terms "controlled by" and "under
common control with"), as used with respect to any Person, shall mean the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, through the ownership
of voting securities, partnership interests, membership interests or other
equity interests.


                                        3

<PAGE>


         Appurtenant Agreements: Collectively, all instruments, documents and
other agreements that now or hereafter create any utility, access or other
rights or appurtenances benefiting or relating to the Leased Property.

         Award: All compensation, sums or anything of value awarded, paid or
received on a total or partial Condemnation.

         Base Rent:  As defined in Section 3.1.

         Business Day: Any day which is not a Saturday or Sunday or a public
holiday under the laws of the United States of America, the Commonwealth of
Massachusetts, the State or the state in which the Lessor's depository bank is
located.

         Capital Additions: Collectively, all new buildings and additional
structures annexed to any portion of any of the Leased Improvements and material
expansions of any of the Leased Improvements which are constructed on any
portion of the Land during the Term, including, without limitation, the
construction of a new wing or new story, the renovation of any of the Leased
Improvements on the Leased Property in order to provide a functionally new
facility that is needed or used to provide services not previously offered and
any expansion, construction, renovation or conversion or in order to (i)
increase the unit capacity of a Facility, (ii) change the purpose for which such
units are utilized and/or (iii) change the utilization of any material portion
of any of the Leased Improvements.

         Capital Addition Cost: The cost of any Capital Addition made by the
Lessee whether paid for by the Lessee or the Lessor. Such cost shall include all
costs and expenses of every nature whatsoever incurred directly or indirectly in
connection with the development, permitting, construction and financing of a
Capital Addition as reasonably determined by, or to the reasonable satisfaction
of, the Lessor.

         CareMatrix: CareMatrix Corporation, a Delaware corporation, and its
successors and assigns.

         Cash Flow: The Net Income (or Net Loss), arising solely from the
operation of the Leased Property, before federal and state income taxes for any
period plus the amount of the provision for depreciation and amortization
actually deducted on the books of the Facility for the purposes of computing
such Consolidated Net Income (or Consolidated Net Loss) for the period involved.

         Cash Flow Rental Payments:  As defined in Section 3.1.

         Casualty:  As defined in Section 13.1.

         Chattel Paper:  As defined in the UCC.


                                        4

<PAGE>



         Closing:  As defined in Section 18.3.

         Code:  The Internal Revenue Code of 1986, as amended.

         Commencement Date:  As defined in Section 1.2.

         Condemnation: With respect to the Leased Property or any interest
therein or right accruing thereto or use thereof (i) the exercise of any
Governmental Authority, whether by legal proceedings or otherwise, by a
Condemnor or (ii) a voluntary sale or transfer by the Lessor to any Condemnor,
either under threat of Condemnation or Taking or while legal proceedings for
Condemnation or Taking are pending.

         Condemnor: Any public or quasi-public authority, or private corporation
or individual, having the power of condemnation.

         Consolidated and Consolidating: The consolidated and consolidating
accounts of the relevant Person and its Subsidiaries consolidated in accordance
with GAAP.

         Consolidated Financials: For any fiscal year or other accounting period
for any Person and its consolidated Subsidiaries, statements of earnings and
retained earnings and of changes in financial position for such period and for
the period from the beginning of the respective fiscal year to the end of such
period and the related balance sheet as at the end of such period, together with
the notes thereto, all in reasonable detail and setting forth in comparative
form the corresponding figures for the corresponding period in the preceding
fiscal year, and prepared in accordance with GAAP, and disclosing all
liabilities of such Person and its consolidated Subsidiaries, including, without
limitation, contingent liabilities.

         Consultants: Collectively, the architects, engineers, inspectors,
surveyors and other consultants that are engaged from time to time by the Lessor
to perform services for the Lessor in connection with this Lease.

         Contracts: All agreements, contracts, (including without limitation,
construction contracts, subcontracts, and architects' contracts,) contract
rights, warranties and representations, franchises, and records and books of
account benefiting, relating to or affecting the Leased Property or the
ownership, construction, development, maintenance, management, repair, use,
occupancy, possession, or operation thereof, or the operation of any programs or
services in conjunction with the Leased Property and all renewals, replacement
and substitutions therefor, now or hereafter issued by or entered into with any
Governmental Authority or maintained or used by any member of the Leasing Group
or entered into by any member of the Leasing Group with any third Person.

         Current Management Agreement: That certain Management Agreement of even
date by and between the Lessee and the Current Manager.


                                        5

<PAGE>



         Current Manager: Netwest Development Corporation, an Arizona
corporation.

         Date of Taking: The date the Condemnor has the right to possession of
the property being condemned.

         Debt Service: All principal and interest payments due and payable under
any Fee Mortgage Loan Documents, but specifically excluding any so-called
"balloon payments" due at the maturity any loan evidenced by any Fee Mortgage
Loan Documents and all costs and expenses incurred in connection with any
refinancing thereof.

         Debt Service Rental Payments: As defined in Section 3.1.

         Deed: As defined in Section 18.3.

         Department: The United States Department of Housing and Urban
Development.

         Documents: As defined in the UCC.

         Encumbrance: As defined in Section 20.3.

         Environmental Enforcement Actions: Collectively, all actions or orders
instituted, threatened or required by any Governmental Authority and all claims
made or threatened by any Person against Lessee or the Leased Property (or any
other occupant, prior occupant or prior owner thereof or any other Person),
arising out of or in connection with any of the Environmental Laws or the
assessment, monitoring, clean-up, containment, remediation or removal of, or
damages caused or alleged to be caused by, any Hazardous Substances (i) located
on or under the Leased Property, (ii) emanating from the Leased Property or
(iii) generated, stored, transported, utilized, disposed of, managed or released
by Lessee or any other occupant of the Leased Property.

         Environmental Laws: Collectively, all Legal Requirements applicable to
(i) environmental conditions on, under or emanating from the Leased Property and
(ii) the generation, storage, transportation, utilization, disposal, management
or release (whether or not on, under or from the Leased Property) of Hazardous
Substances by the Lessee.

         ERISA: The Employment Retirement Income Security Act of 1974, as
amended.

         Event of Default: As defined in Article 16.

         Expiration Date: As defined in Section 1.2.

         Extended Terms: As defined in Section 1.3.


                                        6

<PAGE>


         Facility: The 81 unit retirement, independent living and assisted
living facility known as the Inn at the Amethyst Assisted Living Community
located on the Land (together with related parking and other amenities).

         Facility Expenses: Collectively, (i) all costs, expenses and cash
disbursements of any type relating to or arising out of (a) the ownership of the
Leased Property and which are payable by Lessee hereunder including, without
limitation, Impositions, Capital Additions, Material Structural Work, other
repairs to and/or renovations of the Leased Property, expenses incurred in
connection with the maintenance of the Leased Property and the Debt Service
Rental Payments and the Additional Rent payable by Lessee hereunder, (b) the
operation of the Lessee's business on the Leased Property, including, without
limitation, the funding of any necessary reserves and the payment of any
management fees and (ii) the performance of any obligation imposed on the Lessee
hereunder as a result of any obligations, conditions and/or requirements set
forth under any Fee Mortgage Loan Documents.

         Failure to Perform: As defined Article 16.

         Fair Market Added Value: The Fair Market Value of the Leased Property
(including all Capital Additions) minus the Fair Market Value of the Leased
Property determined as if no Capital Additions paid for by the Lessee had been
constructed.

         Fair Market Value of the Capital Addition: The amount by which the Fair
Market Value of the Leased Property upon the completion of a particular Capital
Addition exceeds the Fair Market Value of the Leased Property just prior to the
construction of the particular Capital Addition.

         Fair Market Value of the Leased Property: The fair market value of the
Leased Property, including all Capital Additions, and including the Land and all
other portions of the Leased Property, and (a) assuming the same is unencumbered
by this Lease, (b) determined in accordance with the appraisal procedures set
forth in Section 18.2 or in such other manner as shall be mutually acceptable to
the Lessor and the Lessee (including, without limitation, as a negotiated
percentage of total project costs) and (c) not taking into account any reduction
in value resulting from any Lien to which the Leased Property is subject and
which Lien the Lessee or the Lessor is otherwise required to remove at or prior
to closing of the transaction. However, the positive or negative effect on the
value of the Leased Property attributable to the interest rate, amortization
schedule, maturity date, prepayment provisions and other terms and conditions of
any Lien on the Leased Property which is not so required or agreed to be removed
shall be taken into account in determining the Fair Market Value of the Leased
Property. The Fair Market Value of the Leased Property shall be determined as
the overall value based on due consideration of the "income" approach, the
"comparable sales" approach, and the "replacement cost" approach.


                                        7

<PAGE>


         Fair Market Value of the Material Structural Work: The amount by which
the Fair Market Value of the Leased Property upon the completion of any
particular Material Structural Work exceeds the Fair Market Value of the Leased
Property just prior to the construction of the applicable Material Structural
Work.

         Fee Mortgage: As defined in Section 20.3.

         Fee Mortgagee: As defined in Section 20.3.

         Fee Mortgage Loan Documents: Collectively, all documents, instruments
and agreements now or hereafter executed by the Lessor evidencing and/or
securing any loan secured by any Fee Mortgage, as the same may be amended,
modified or extended from time to time.

         Financing Party: Any Person who is or may be participating with the
Lessor in any way in connection with the financing of any Capital Addition.

         Fiscal Year: The twelve (12) month period from January 1st to December
31st.

         Fixtures: As defined in Article 1.

         GAAP: Generally accepted accounting principles, consistently applied
throughout the relevant period.

         General Intangibles: As defined in the UCC.

         Governmental Authorities: Collectively, all agencies, authorities,
bodies, boards, commissions, courts, instrumentalities, legislatures, and
offices of any nature whatsoever of any government, quasi-government unit or
political subdivision, whether with a federal, state, county, district,
municipal, city or otherwise and whether now or hereinafter in existence.

         Gross Revenues: Collectively, all revenues generated by reason of the
operation of the Leased Property (including any Capital Additions), whether or
not directly or indirectly received or to be received by the Lessee, including,
without limitation, all revenues received or receivable for the use of, or
otherwise by reason of, all rooms, beds and other facilities provided,
membership fees, entrance fees, meals served, catering and other services
performed, space or facilities subleased or goods sold on or from the Leased
Property, including, without limitation, any revenues generated from gift shop,
coffee shop, vending machine, laundry machine, barber shop, beauty shop and all
other concessions and further including, without limitation, except as otherwise
specifically provided below, any consideration received under any subletting,
licensing, or other arrangements with any Person relating to the possession or
use of the Leased Property and all revenues from all ancillary services provided
at or relating to the Leased Property; provided, however, that Gross


                                        8

<PAGE>


Revenues shall not include non-operating revenues such as interest income or
gain from the sale of assets not sold in the ordinary course of business and
shall not include the proceeds of any loans received by the Lessee; and
provided, further, that there shall be excluded or deducted (as the case may be)
from such revenues:

         (i) contractual allowances (relating to any period during the Term of
this Lease and thereafter until the Rent hereunder is paid in full) for billings
not paid by or received from the appropriate Governmental Agencies or third
party payors,

         (ii) allowances according to GAAP for uncollectible accounts,

         (iii) all proper patient and/or resident billing credits and
adjustments according to GAAP,

         (iv) federal, state or local sales, use, gross receipts and excise
taxes and any tax based upon or measured by said Gross Revenues which is added
to or made a part of the amount billed to the patient, resident or other
recipient of such services or goods, whether included in the billing or stated
separately,

         (v) provider discounts for hospital or other medical facility
utilization contracts,

         (vi) the cost of any federal, state or local governmental program
imposed specially to provide or finance indigent patient and/or resident care
(other than Medicare, Medicaid and the like), and

         (vii) deposits refundable to residents of the Facility.

         To the extent that the Leased Property is subleased or occupied by an
Affiliate of the Lessee which is a wholly-owned Subsidiary of CareMatrix, Gross
Revenues calculated for all purposes of this Lease shall include the Gross
Revenues of such Sublessee with respect to the premises demised under the
applicable Sublease (i.e., the Gross Revenues generated from the operations
conducted on such subleased portion of the Leased Property) and the rent
received or receivable from such Sublessee pursuant to such Subleases shall be
excluded from Gross Revenues for all such purposes. As to any other Sublease,
only the rental actually received by the Lessee shall be included in Gross
Revenues.

         Hazardous Substances: Collectively, (i) any "hazardous material,"
"hazardous substance," "hazardous waste," "oil," "regulated substance," "toxic
substance," "restricted hazardous waste", "special waste" or words of similar
import as defined under any of the Environmental Laws; (ii) asbestos in any
form; (iii) urea formaldehyde foam insulation; (iv) polychlorinated biphenyls;
(v) radon gas; (vi) flammable explosives; (vii) radioactive materials; (viii)
any chemical, containment, solvent, material, pollutant or substance that may be
dangerous or detrimental to the Leased Property, the environment, or the health
and safety of the patients, residents and other occupants of the Leased Property
or of the owners


                                        9

<PAGE>


or occupants of any other real property nearby the Leased Property and (ix) any
substance, the generation, storage, transportation, utilization, disposal,
management, release or location of which, on, under or from the Leased Property
is prohibited or otherwise regulated pursuant to any of the Environmental Laws.

         HUD Escrow Accounts: Collectively, all escrow accounts held by the HUD
Mortgagee to secure the obligations under the HUD Financing Documents.

         HUD Financing Documents: Collectively, the HUD Insured Note, the HUD
Insured Mortgage, the Additional HUD Insured Mortgage, the HUD Regulatory
Agreements and all other documents and instruments evidencing, securing or
otherwise given in connection with the loan evidenced by the HUD Insured Note,
as all of the same may be hereafter amended, modified, revised, renewed and/or
replaced.

         HUD Insured Mortgage: That certain Deed of Trust, dated as of December
15, 1988, granted by the Lessor to Title USA Company of Arizona as Trustee for
the benefit of RLM, recorded in the Office of the Maricopa County Recorder in
Document No. 88-609068, as affected by (i) that certain Consolidation and
Modification Agreement, dated as of June 25, 1990, by and between the Lessor,
RLM and the Department, recorded in the Office of the Maricopa County Recorder
in Document No. 90-282764, (ii) that certain Assignment of Deed of Trust, dated
June 27, 1990, from RLM to the HUD Mortgagee, recorded in the Office of the
Maricopa County Recorder in Document No. 90-286786, and (iii) that certain
Modification of Deed of Trust Note and Deed of Trust, dated as of December 15,
1992, by and between the Lessor and the HUD Mortgagee, recorded in the Office of
the Maricopa County Recorder in Document No. 92-714603.

         HUD Insured Note: That certain Deed of Trust Note dated December 15,
1988, in the original principal amount of THREE MILLION SIX HUNDRED THIRTY-THREE
THOUSAND FIVE HUNDRED DOLLARS ($3,633,500) made by the Lessor to RLM, as
affected by that certain Modification of Deed of Trust Note and Deed of Trust,
dated as of December 15, 1992, by and between the Lessor and the HUD Mortgagee,
recorded in the Office of the Maricopa County Recorder in Document No.
92-714603.

         HUD Mortgagee: The State Teachers Retirement Board of Ohio, a statutory
organization under the laws of the State of Ohio.

         HUD Regulatory Agreements: Collectively, that certain (i) Regulatory
Agreement by and between the Lessor and the HUD Secretary, dated December 15,
1988 and (ii) Regulatory Agreement by and between the Lessee and the HUD
Secretary, as the same may be hereafter amended, modified, revised, reviewed
and/or replaced.

         HUD Secretary: The Secretary of Housing and Urban Development, acting
by and through the Federal Housing Commissioner.


                                       10

<PAGE>


         Impositions: Collectively, all taxes (including, without limitation,
all capital stock and franchise taxes of the Lessor, all ad valorem, property,
sales, use, single business, gross receipts, transaction privilege, rent or
similar taxes), assessments (including, without limitation, all assessments for
public improvements or benefits, whether or not commenced or completed prior to
the date hereof and whether or not to be completed within the Term), ground
rents, rent, occupancy and/or hotel taxes, water and sewer rents, water charges
or other rents and charges, excises, tax levies, fees (including, without
limitation, license, permit, inspection, authorization and similar fees),
transfer taxes and recordation taxes imposed as a result of this Lease or any
extensions hereof, and all other governmental charges, in each case whether
general or special, ordinary or extraordinary, or foreseen or unforeseen, of
every character in respect of either or both of the Leased Property and the Rent
(including all interest and penalties thereon due to any failure in payment by
the Lessee), which at any time prior to, during or in respect of the Term hereof
and thereafter until the Leased Property is surrendered to the Lessor as
required by the terms of this Lease, may be assessed or imposed on or in respect
of or be a Lien upon (a) the Lessor or the Lessor's interest in the Leased
Property, (b) the Leased Property or any rent therefrom or any estate, right,
title or interest therein, or (c) any occupancy, operation, use or possession
of, sales from, or activity conducted on, or in connection with, the Leased
Property or the leasing or use of the Leased Property. Notwithstanding the
foregoing, nothing contained in this Lease shall be construed to require the
Lessee to pay (1) any tax based on net income (whether denominated as a
franchise or capital stock or other tax) imposed on the Lessor or any other
Person, except the Lessee or its successors, (2) any net revenue tax of the
Lessor or any other Person, except the Lessee and its successors, (3) any tax
imposed with respect to the proceeds, or any portion thereof, received by the
Lessor as a result of the sale, exchange or other disposition by the Lessor of
the Leased Property, except any sale, transfer, exchange or other disposition of
the Leased Property to the Lessee, or (4) except as expressly provided elsewhere
in this Lease, any principal or interest on any Encumbrance on the Leased
Property; provided, however, the provisos set forth in clauses (1) and (2) of
this sentence shall not be applicable to the extent that any tax, assessment,
tax levy or charge which the Lessee is obligated to pay pursuant to the first
sentence of this definition and which is in effect at any time during the Term
hereof is totally or partially repealed, and a tax, assessment, tax levy or
charge set forth in clause (1) or (2) is levied, assessed or imposed expressly
in lieu thereof. In computing the amount of any franchise tax or capital stock
tax which may be or become an Imposition, the amount payable by the Lessee shall
be equitably apportioned based upon all properties owned by the Lessor that are
located within the particular jurisdiction subject to any such tax.

         Indebtedness: The total of all obligations of a Person, whether current
or long-term, which in accordance with GAAP would be included as liabilities
upon such Person's balance sheet at the date as of which Indebtedness is to be
determined, and shall also include (i) all capital lease obligations and (ii)
all guarantees, endorsements (other than for collection of instruments in the
ordinary course of business), or other arrangements whereby responsibility is
assumed for the obligations of others, whether by agreement to purchase or
otherwise acquire the obligations of others, including any agreement contingent
or otherwise to furnish


                                       11

<PAGE>


funds through the purchase of goods, supplies or services for the purpose of
payment of the obligations of others.

         Indemnified Parties: As defined in Section 12.2.

         Initial Term: As defined in Section 1.2.

         Instruments: As defined in the UCC.

         Insurance Requirements: All terms of any insurance policy required by
this Lease, all requirements of the issuer of any such policy with respect to
the Leased Property and the activities conducted thereon and the requirements of
any insurance board, association or organization or underwriters' regulations
pertaining to the Leased Property.

         Land: As defined in Article 1.

         Lease: As defined in the preamble of this Lease.

         Lease Default: The occurrence of any default or breach of condition
continuing beyond any applicable notice and/or grace periods under this Lease
and/or any of the other Lease Documents.

         Lease Documents: Collectively, this Lease, and any and all other
instruments, documents, certificates or agreements now or hereafter (i) executed
or furnished by any member of the Leasing Group in connection with the
transactions evidenced by this Lease and/or any of the foregoing documents
and/or (ii) evidencing or securing any of the Lessee's obligations relating to
the Leased Property, including, without limitation, the Lessee's obligations
hereunder, as the same may be amended from time to time.

         Lease Obligations: Collectively, all indebtedness, covenants,
liabilities, obligations, agreements and undertakings (other than the Lessor's
obligations) under this Lease and the other Lease Documents.

         Leased Improvements:  As defined in Article 1.

         Leased Property:  As defined in Article 1.

         Leasing Group: Collectively, the Lessee, any Sublessee and any Manager.

         Legal Requirements: Collectively, all statutes, ordinances, by-laws,
codes, rules, regulations, restrictions, orders, judgments, decrees and
injunctions (including, without limitation, all applicable building, health
code, zoning, subdivision, and other land use and health-care assisted living
and independent senior housing licensing statutes, ordinances, by-laws, codes,
rules and regulations), whether now or hereafter enacted, promulgated or issued


                                       12

<PAGE>


by any Governmental Authority, affecting the Lessor, any member of the Leasing
Group or the Leased Property or the ownership, construction, development,
maintenance, management, repair, use, occupancy, possession or operation thereof
or the operation of any programs or services in connection with the Leased
Property, including, without limitation, any of the foregoing which may (i)
require repairs, modifications or alterations in or to the Leased Property, (ii)
in any way affect (adversely or otherwise) the use and enjoyment of the Leased
Property or (iii) require the assessment, monitoring, clean-up, containment,
removal, remediation or other treatment of any Hazardous Substances on, under or
from the Leased Property. Without limiting the foregoing, the term Legal
Requirements includes all Environmental Laws and shall also include all Permits
and Contracts issued or entered into by any Governmental Authority and all
Permitted Encumbrances.

         Lessee: As defined in the preamble of this Lease and its successors and
assigns.

         Lessee's Election Notice: As defined in Section 14.3.

         Lessee's Purchase Option Notice: As defined in Section 18.3.

         Lessor: As defined in the preamble of this Lease and its successors and
assigns.

         Lessor's Personal Property: The personal property owned by the Lessor
that located at or used in connection with the operation of the Leased Property.

         Lien: With respect to any real or personal property, any mortgage,
easement, restriction, lien, pledge, collateral assignment, hypothecation,
charge, security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment or other encumbrance of any kind in respect of such
property, whether or not choate, vested or perfected.

         Management Agreement: Any agreement, whether written or oral, between
the Lessee or any Sublessee and any other Person pursuant to which the Lessee or
such Sublessee provides any payment, fee or other consideration to any other
Person to operate or manage the Facility, as the same may be amended, modified
or extended from time to time, including, without limitation, the Current
Management Agreement.

         Manager: Any Person who has entered into a Management Agreement with
the Lessee or any Sublessee, including, without limitation, the Current Manager.

         Material Structural Work: Any (i) structural alteration, (ii)
structural repair or (iii) structural renovation to the Leased Property that
would require (a) the design and/or involvement of a structural engineer and/or
architect and/or (b) the issuance of a Permit.

         Monthly Debt Service: The monthly debt service (i.e. all interest,
including without limitation, interest, if any, calculated at a default or
penalty rate and principal) payments due under any Fee Mortgage Loan Documents
during any calendar month including, without


                                       13

<PAGE>


limitation, any costs, expenses and late charges incurred by the Lessor as a
result of any failure by the Lessee to satisfy, on a timely basis, the Lessee's
obligations under the Lease, but, specifically excluding any so-called "balloon
payments" due at the maturity thereof.

         Net Income (or Net Loss): The net income (or net loss, expressed as a
negative number) of the Facility for any period, after all taxes actually paid
or accrued and all expenses and other charges determined in accordance with
GAAP.

         Non-Chancellor Percentage: The percentage of the partnership interests,
from time to time, held in the Lessor by all partners other than Chancellor of
Arizona, Inc.

         Officer's Certificate: A certificate of the Lessee signed on behalf of
the Lessee by the Chairman of the Board of Directors, the President, any Vice
President or the Treasurer of the Lessee, or another officer authorized to so
sign by the Board of Directors or By-Laws of the Lessee, or any other Person
whose power and authority to act has been authorized by delegation in writing by
any of the Persons holding the foregoing offices.

         Overdue Rate: On any date, a rate of interest per annum equal to the
greater of: (i) a variable rate of interest per annum equal to one hundred
twenty percent (120%) of the Prime Rate, or (ii) eighteen percent (18%) per
annum; provided, however, in no event shall the Overdue Rate be greater than the
maximum rate then permitted under applicable law to be charged by the Lessor.

         PBGC: Pension Benefit Guaranty Corporation.

         Permits: Collectively, all permits, licenses, approvals,
qualifications, rights, variances, permissive uses, accreditations,
certificates, certifications, consents, agreements, contracts, contract rights,
franchises, interim licenses, permits and other authorizations of every nature
whatsoever required by, or issued under, applicable Legal Requirements
benefiting, relating or affecting the Leased Property or the construction,
development, maintenance, management, use or operation thereof, or the operation
of any programs or services in conjunction with the Leased Property and all
renewals, replacements and substitutions therefor, now or hereafter required or
issued by any Governmental Authority, Accreditation Body or Third Party Payor to
any member of the Leasing Group, or maintained or used by any member of the
Leasing Group, or entered into by any member of the Leasing Group with any third
Person.

         Permitted Encumbrances: Collectively, those agreements, covenants and
Liens to which this Lease is expressly subject, whether presently existing, as
are listed on EXHIBIT B or were listed on the UCC lien search results delivered
to the Lessor at or prior to the execution and delivery of this Lease (and were
not required to be terminated as a condition of the execution and delivery of
this Lease), or which may hereafter be created in accordance with the terms
hereof, including, without limitation, any Encumbrances.


                                       14

<PAGE>


         Permitted Prior Security Interests: As defined in Section 6.1.

         Person: Any individual, corporation, general partnership, limited
partnership, joint venture, stock company or association, company, bank, trust,
trust company, land trust, business trust, unincorporated organization,
unincorporated association, Governmental Authority or other entity of any kind
or nature.

         Plans and Specifications: As defined in Section 13.1.

         Positive Cash Flow: The excess, if any, of the Gross Revenues for any
given period over the total amount of Facility Expenses for the applicable
period.

         Primary Intended Use: The use of the Facility as an independent living
and assisted living facility with eighty-one (81) units or such additional
number of units as may hereafter be permitted under this Lease, and such
ancillary uses as are permitted by law and may be necessary in connection
therewith or incidental thereto; provided, however, that, subject to the terms
of the HUD Regulatory Agreement, as long as the number of units at the Facility
is at no time below 160, the Lessee may change the number of units at the
Facility, provided, further, that (i) any such change is effected in accordance
with all applicable Legal Requirements, (ii) the Lessee shall deliver to the
Lessor prior written notice of its intention to effect such change and (iii) it
is not reasonably foreseeable that any such change would have a materially
adverse impact on the financial condition of the Facility.

         Prime Rate: The variable rate of interest per annum from time to time
announced by the Reference Bank as its prime rate of interest and in the event
that the Reference Bank no longer announces a prime rate of interest, then the
Prime Rate shall be deemed to be the variable rate of interest per annum which
is the prime rate of interest or base rate of interest from time to time
announced by any other major bank or other financial institution reasonably
selected by the Lessor.

         Principal Place of Business: As defined in Section 10.1.

         Proceeds: As defined in the UCC.

         Purchase Option: As defined in Section 18.3.

         Purchase Price: As defined in Section 18.3.

         Receivables: Collectively, all (i) Instruments, Documents, Accounts,
Proceeds, General Intangibles and Chattel Paper and (ii) rights to payment for
goods sold or leased or services rendered by the Lessee or any other party,
whether now in existence or arising from time to time hereafter and whether or
not yet earned by performance, including, without limitation, obligations
evidenced by an account, note, contract, security agreement, chattel paper, or
other evidence of indebtedness.


                                       15

<PAGE>


         Reference Bank: NationsBank, N.A.

         Rent: Collectively, the Base Rent, the Additional Rent, the Additional
Charges and all other sums payable under this Lease and the other Lease
Documents.

         Rent Insurance Proceeds: As defined in Section 13.8.

         Resident Agreements: Collectively, all Subleases now or hereafter
executed or entered into by or on behalf of any Person allowing such Person to
reside at the Facility, as the same may be amended from time to time.

         Retainage: As defined in Section 13.1.

         RLM: Reinlein/Leiser/McGee, a California general partnership.

         State: The state or commonwealth in which the Leased Property is
located.

         Sublease: Collectively, all subleases, licenses, use agreements,
concession agreements, tenancy at will agreements, room rentals, rentals of
other facilities of the Leased Property and all other occupancy agreements of
every kind and nature, whether oral or in writing, now in existence or
subsequently entered into by the Lessee, encumbering or affecting the Leased
Property.

         Sublessee: Any sublessee, licensee, concessionaire, tenant or other
occupant under any of the Subleases, but excluding any resident of the Facility
under any Resident Agreement.

         Subsidiary or Subsidiaries: With respect to any Person, any corporation
or other entity of which such Person, directly, or indirectly, through another
entity or otherwise, owns, or has the right to control or direct the voting of,
fifty percent (50%) or more of the outstanding capital stock or other ownership
interest having general voting power (under ordinary circumstances).

         Surplus Cash: With respect to any applicable period, any cash remaining
after:

         (l)      the payment of the

                  (a)      all sums due or currently required to be paid under
                           the terms of any of the HUD Financing Documents;

                  (b)      all amounts required to be deposited in the reserve
                           fund for replacements under the HUD Financing
                           Documents;


                                       16

<PAGE>


                  (c)      all other Facility Expenses other than the
                           obligations described in clause (a) above unless
                           funds are set aside or deferment of payment has been
                           approved by the HUD Secretary; and

         (2)      The segregation of:

                  (a)      an amount equal to the aggregate of all special funds
                           required to be maintained by the Facility under the
                           HUD Financing Documents; and

                  (b)      all tenants security deposits held.


         Surrounding Property: Any real property that abuts the Leased Property
or any portion thereof.

         Taking: A taking or voluntary conveyance during the Term of the Leased
Property, or any interest therein or right accruing thereto, or use thereof, as
the result of, or in settlement of, any Condemnation or other eminent domain
proceeding affecting the Leased Property whether or not the same shall have
actually been commenced.

         Tangible Personal Property: All machinery, equipment, furniture,
furnishings, movable walls or partitions, computers or trade fixtures, goods,
inventory, supplies, and other personal property owned or leased (pursuant to
equipment leases) by the Lessee and used in connection with the operation of the
Leased Property.

         Term: Collectively, the Initial Term and each Extended Term which has
become effective pursuant to Section 1.3, as the context may require, unless
earlier terminated pursuant to the provisions hereof.

         Time of Closing: As defined in Section 18.3.

         UCC: The Uniform Commercial Code as in effect from time to time in the
State of Arizona.

         Unavoidable Delays: Delays due to strikes, lockouts, inability to
procure materials, power failure, acts of God, governmental restrictions, enemy
action, civil commotion, fire, unavoidable casualty or other causes beyond the
control of the party responsible for performing an obligation hereunder,
provided that lack of funds shall not be deemed a cause beyond the control of
either party hereto.

         Unsuitable For Its Primary Intended Use: As used anywhere in this
Lease, the term "Unsuitable For Its Primary Intended Use" shall mean that, by
reason of Casualty, or a partial or temporary Taking by Condemnation, in the
good faith judgment of the Lessor, the


                                       17

<PAGE>


Facility cannot be operated on a commercially practicable basis for the Primary
Intended Use, taking into account, among other relevant factors, the number of
usable units affected by such Casualty or partial or temporary Taking.

         Work: As defined in Section 13.1.

         Work Certificates: As defined in Section 13.1.

         2.2 Rules of Construction. The following rules of construction shall
apply to the Lease and each of the other Lease Documents: (a) references to
"herein", "hereof" and "hereunder" shall be deemed to refer to this Lease or the
other applicable Lease Document, and shall not be limited to the particular text
or section or subsection in which such words appear; (b) the use of any gender
shall include all genders and the singular number shall include the plural and
vice versa as the context may require; (c) references to the Lessor's attorneys
shall be deemed to include, without limitation, special counsel and local
counsel for the Lessor; (d) reference to attorneys' fees and expenses shall be
deemed to include all costs for administrative, paralegal and other support
staff; (e) references to Leased Property shall be deemed to include references
to all of the Leased Property and references to any portion thereof; (f)
references to the Lease Obligations shall be deemed to include references to all
of the Lease Obligations and references to any portion thereof; (g) the term
"including", when following any general statement, will not be construed to
limit such statement to the specific items or matters as provided immediately
following the term "including" (whether or not non-limiting language such as
"without limitation" or "but not limited to" or words of similar import are also
used), but rather will be deemed to refer to all of the items or matters that
could reasonably fall within the broadest scope of the general statement; (h)
any requirement that financial statements be Consolidated in form shall apply
only to such financial statements as relate to a period during any portion of
which the relevant Person has one or more Subsidiaries; (i) all accounting terms
not specifically defined in the Lease Documents shall be construed in accordance
with GAAP and (j) all exhibits annexed to any of the Lease Documents as
referenced therein shall be deemed incorporated in such Lease Document by such
annexation and/or reference, (k) all references to any Fee Mortgage Loan
Documents shall mean such Fee Mortgage Loan Documents as may then be in force
and effect and (l) all references to any Fee Mortgagee shall mean the holder of
any Fee Mortgage that is then in force and effect.


                                    ARTICLE 3
                                    ---------

                                      RENT
                                      ----

         3.1 Rent for Land, Leased Improvements, Related Rights and Fixtures.
The Lessee shall pay to the Lessor a base rent (the "Base Rent") per annum that
is equal to: (a) an amount equal to the Debt Service due from the Lessor to the
holder of any Fee Mortgage encumbering the Leased Property during the applicable
period (the "Debt Service Rental


                                       18

<PAGE>


Payments") and (b) an amount equal to the Non-Chancellor Percentage multiplied
by the Positive Cash Flow, if any, for the applicable period (the "Cash Flow
Rental Payments"). The Debt Service Rental Payments and the Cash Flow Rental
Payments shall be payable in arrears on the first day of each calendar month,
commencing on April 1, 1998; provided, however, that in the event that the terms
of any promissory note secured by any Fee Mortgage requires Debt Service from
the Lessor to be paid on any basis other than monthly in arrears, the Lessee's
obligation to make monthly payments of the Debt Service Rental Payments shall be
adjusted accordingly to coincide with the schedule of payments due to the
applicable Fee Mortgagee under the applicable Fee Mortgage Loan Documents. The
monthly Cash Flow Rental Payments to be paid in arrears shall be paid based upon
the Lessee's estimate of the Positive Cash Flow for the immediately preceding
month and shall be adjusted on the date that the next monthly Cash Flow Rental
Payment is due, based on the actual Positive Cash Flow for the applicable month.

         The Lessor may refinance any Fee Mortgage now or hereafter encumbering
the Leased Property, provided, that the Lessor obtains the Lessee's prior
written consent to all of the terms and conditions of any such refinancing,
which consent may be withheld in the Lessee's sole and absolute discretion.

         The Lessee will pay to the Lessor, in lawful money of the United States
of America, at the Lessor's address set forth herein or at such other place or
to such other Person as the Lessor from time to time may designate in writing,
the Cash Flow Rental Payments. The Lessee will pay the Debt Service Rental
Payments, in lawful money of the United States of America, directly to the
applicable Fee Mortgagee (at the address that the Lessor or the Fee Mortgagee
shall from time to time designate in writing to the Lessee).

         The Base Rent due and payable hereunder for any fractional month during
the Term shall be prorated accordingly.

         Notwithstanding anything to the contrary set forth herein, at all times
while any of the HUD Financing Documents may be in effect, (i) Cash Flow Rental
Payments shall be defined as an amount equal to the Non-Chancellor Percentage
multiplied by the Surplus Cash, if any for the applicable period, (ii) Cash Flow
Rental Payments may only be made bi-annually, for the periods ending June 30th
and December 31st of each year and (iii) Cash Flow Rental Payments may only be
made after obtaining approval from the HUD Secretary with respect to the
calculation of the Surplus Cash for the applicable period.

         3.2 Additional Rent. In addition to the Base Rent due and payable
hereunder, the Lessee shall pay, as additional rent (the "Additional Rent") an
amount equal to the Additional Debt Service Payments then due and payable under
any applicable Fee Mortgage Loan Documents. The Additional Rent shall be due and
payable when and if the Additional Debt Service Payments are due and payable
under the applicable Fee Mortgage Loan Documents. The Lessee will pay the
Additional Rent, in lawful money of the United States of America,


                                       19

<PAGE>


directly to the applicable Fee Mortgagee (at the address that the Lessor or the
Fee Mortgagee shall from time to time designate in writing the Lessee).

         Additional Rent due and payable hereunder for any fractional month
during the terms shall be prorated accordingly.

         3.3 Additional Charges. Subject to the rights to contest as set forth
in Article 15, in addition to the Base Rent and Additional Rent, (a) the Lessee
will also pay and discharge as and when due and payable all Impositions, all
amounts, liabilities and obligations under the Appurtenant Agreements due from
or payable by the owner of the Leased Property, all amounts, liabilities and
obligations under the Permitted Encumbrances due from or payable by the owner of
the Leased Property and all other amounts, liabilities and obligations which the
Lessee assumes or agrees to pay under this Lease, and (b) in the event of any
failure on the part of the Lessee to pay any of those items referred to in
clause (a) above, the Lessee will also promptly pay and discharge every fine,
penalty, interest and cost which may be added for non-payment or late payment of
such items (the items referred to in clauses (a) and (b) above being referred to
herein collectively as the "Additional Charges"), and the Lessor shall have all
legal, equitable and contractual rights, powers and remedies provided in this
Lease, by statute or otherwise, in the case of non-payment of the Additional
Charges, as well as the Base Rent and the Additional Rent. To the extent that
the Lessee pays any Additional Charges to the Lessor pursuant to any requirement
of this Lease, the Lessee shall be relieved of its obligation to pay such
Additional Charges to any other Person to which such Additional Charges would
otherwise be due.

         3.4 Net Lease. The Rent shall be paid absolutely net to the Lessor, so
that this Lease shall yield to the Lessor the full amount of the installments of
Base Rent, Additional Rent and Additional Charges throughout the Term, without
reduction, abatement or offset, except as may be expressly provided herein.

         3.5 No Lessee Termination or Offset.

         3.5.1 No Termination. Except as may be otherwise specifically and
expressly provided in this Lease, the Lessee, to the extent not prohibited by
applicable law, shall remain bound by this Lease in accordance with its terms
and shall neither take any action without the consent of the Lessor to modify,
surrender or terminate the same, nor seek nor be entitled to any abatement,
deduction, deferment or reduction of Rent, or set-off against the Rent, nor
shall the respective obligations of the Lessor and the Lessee be otherwise
affected by reason of (a) any Casualty or any Taking of the Leased Property, (b)
the lawful or unlawful prohibition of, or restriction upon, the Lessee's use of
the Leased Property or the interference with such use by any Person (other than
the Lessor, except to the extent permitted hereunder) or by reason of eviction
by paramount title; (c) any claim that the Lessee has or might have against the
Lessor, (d) any default or breach of any warranty by the Lessor under this Lease
or any other Lease Document, (e) any bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding up or other


                                       20

<PAGE>


proceedings affecting the Lessor or any assignee or transferee of the Lessor or
(f) any other cause whether similar or dissimilar to any of the foregoing, other
than a discharge of the Lessee from any of the Lease Obligations as a matter of
law.

         3.5.2 Waiver. The Lessee to the fullest extent not prohibited by
applicable law, hereby specifically waives all rights, arising from any
occurrence whatsoever, which may now or hereafter be conferred upon it by law to
(a) modify, surrender or terminate this Lease or quit or surrender the Leased
Property or (b) entitle the Lessee to any abatement, reduction, suspension or
deferment of the Rent or other sums payable by the Lessee hereunder, except as
otherwise specifically and expressly provided in this Lease.

         3.5.3 Independent Covenants. The obligations of the Lessor and the
Lessee hereunder shall be separate and independent covenants and agreements and
the Rent and all other sums payable by the Lessee hereunder shall continue to be
payable in all events unless the obligations to pay the same shall be terminated
pursuant to the express provisions of this Lease or (except in those instances
where the obligation to pay expressly survives the termination of this Lease) by
termination of this Lease other than by reason of an Event of Default.

         3.6 Abatement of Rent Limited. There shall be no abatement of Rent on
account of any Casualty, Taking or other event, except that in the event of a
partial Taking or a temporary Taking as described in Section 14.3, the Base Rent
shall be abated as follows: (a) in the case of such a partial Taking, Base Rent
then due during the Lease Year in which such Taking occurs shall be reduced to
equal the product of (i) the then current Base Rent multiplied by (ii) the
difference between one minus a fraction the numerator of which is the Award, the
denominator of which is the Fair Market Value of the Leased Property, and (b) in
the case of such a temporary Taking, by reducing the Base Rent for the period of
such a temporary Taking, by the net amount of the Award received by the Lessor.

         For the purposes of this Section 3.6, the "net amount of the Award
received by the Lessor" shall mean the Award paid to the Lessor on account of
such Taking, minus all costs and expenses incurred by the Lessor in connection
therewith, and minus any amounts paid to or for the account of the Lessee to
reimburse for the costs and expenses of reconstructing the Facility following
such Taking in order to create a viable and functional Facility under all of the
circumstances.



                                       21

<PAGE>


                                   ARTICLE 4
                                   ---------

                         IMPOSITIONS; TAXES; UTILITIES;
                         ------------------------------
                               INSURANCE PAYMENTS
                               ------------------


         4.1 Payment of Impositions.

         4.1.1 Lessee To Pay. Subject to the provisions of Section 4.1.2 and
Article 15, the Lessee will pay or cause to be paid all Impositions before any
fine, penalty, interest or cost may be added for non-payment, such payments to
be made directly to the taxing authority where feasible, and the Lessee will
promptly furnish the Lessor copies of official receipts or other satisfactory
proof evidencing payment not later than the last day on which the same may be
paid without penalty or interest. Subject to the provisions of Article 15 and
Section 4.1.2, the Lessee's obligation to pay such Impositions shall be deemed
absolutely fixed upon the date such Impositions become a lien upon the Leased
Property or any part thereof.

         4.1.2 Installment Elections. If any such Imposition may, at the option
of the taxpayer, lawfully be paid in installments (whether or not interest shall
accrue on the unpaid balance of such Imposition), the Lessee may exercise the
option to pay the same (and any accrued interest on the unpaid balance of such
Imposition) in installments and, in such event, shall pay such installments
during the Term hereof (subject to the Lessee's right to contest pursuant to the
provisions of Section 4.1.5 below) as the same respectively become due and
before any fine, penalty, premium, further interest or cost may be added
thereto.

         4.1.3 Returns and Reports. The Lessor, at its expense, shall, to the
extent permitted by applicable law and subject to Section 11.3.9, prepare and
file all tax returns and reports as may be required by Governmental Authorities
in respect of the Lessor's net income, gross receipts, franchise taxes and taxes
on its capital stock, and the Lessee, at its expense, shall, to the extent
permitted by applicable laws and regulations, prepare and file all other tax
returns and reports in respect of any Imposition as may be required by
Governmental Authorities. The Lessor and the Lessee shall, upon request of the
other, provide such data as is maintained by the party to whom the request is
made with respect to the Leased Property as may be necessary to prepare any
required returns and reports. In the event that any Governmental Authority
classifies any property covered by this Lease as personal property, the Lessee
shall file all personal property tax returns in such jurisdictions where it may
legally so file. The Lessor, to the extent it possesses the same, and the
Lessee, to the extent it possesses the same, will provide the other party, upon
request, with cost and depreciation records necessary for filing returns for any
portion of Leased Property so classified as personal property. Where the Lessor
is legally required to file personal property tax returns, if the Lessee
notifies the Lessor of the obligation to do so in each year at least thirty (30)
days prior to the date any protest must be filed, the Lessee will be provided
with copies of assessment notices so as to enable the Lessee to file a protest.


                                       22

<PAGE>


         4.1.4 Refunds. If no Lease Default shall have occurred and be
continuing, subject to the terms of any Fee Mortgage Loan Documents, any refund
due from any taxing authority in respect of any Imposition paid by the Lessee
shall be paid over to or retained by the Lessee. If a Lease Default shall have
occurred and be continuing, at the Lessor's or the Fee Mortgagee's option,
exercisable by written notice to the Lessee, such funds shall be paid over to
the Lessor or the Fee Mortgagee or shall be retained by the Lessor and, in any
such event, shall be applied toward the Lease Obligations in accordance with the
Lease Documents.

         4.1.5 Protest. Upon giving notice to the Lessor, at the Lessee's option
and sole cost and expense, and subject to compliance with the provisions of
Article 15, and the terms of any of the Fee Mortgage Loan Documents, the Lessee
may contest, protest, appeal, or institute such other proceedings as the Lessee
may deem appropriate to effect a reduction of any Imposition and the Lessor, at
the Lessee's cost and expense as aforesaid, shall fully cooperate in a
reasonable manner with the Lessee in connection with such protest, appeal or
other action.

         4.2 Notice of Impositions. The Lessor shall give prompt notice to the
Lessee of all Impositions payable by the Lessee hereunder of which the Lessor at
any time has knowledge, but the Lessor's failure to give any such notice shall
in no way diminish the Lessee's obligations hereunder to pay such Impositions.

         4.3 Adjustment of Impositions. Impositions imposed in respect of the
period during which the expiration or earlier termination of the Term occurs
shall be adjusted and prorated between the Lessor and the Lessee, whether or not
such Impositions are imposed before or after such expiration or termination, and
the Lessee's obligation to pay its prorated share thereof shall survive such
expiration or termination.

         4.4 Utility Charges. The Lessee will pay or cause to be paid all
charges for electricity, power, gas, oil, water, telephone and other utilities
used in the Leased Property during the Term and thereafter until the Lessee
surrenders the Leased Property in the manner required by this Lease.

         4.5 Insurance Premiums. The Lessee will pay or cause to be paid all
premiums for the insurance coverage required to be maintained pursuant to
Article 12 during the Term, and thereafter until the Lessee yields up the Leased
Property in the manner required by this Lease. All such premiums shall be paid
annually in advance and the Lessee shall furnish the Lessor with evidence
satisfactory to the Lessor that all such premiums have been so paid prior to the
commencement of the Term and thereafter at least thirty (30) days prior to the
due date of each premium which thereafter becomes due. Notwithstanding the
foregoing, the Lessee may pay such insurance premiums to the insurer in monthly
installments so long as the applicable insurer is contractually obligated to
give the Lessor not less than a thirty (30) days notice of non-payment and so
long as no Lease Default has occurred and is continuing. In the event of the
failure of the Lessee either to comply with the insurance requirements in


                                       23

<PAGE>


Article 12, or to pay the premiums for such insurance, or to deliver such
policies or certificates thereof to the Lessor at the times required hereunder,
the Lessor shall be entitled, but shall have no obligation, to effect such
insurance and pay the premiums therefor, which premiums shall be a demand
obligation of the Lessee to the Lessor.


                                    ARTICLE 5
                                    ---------

               OWNERSHIP OF LEASED PROPERTY AND PERSONAL PROPERTY;
               ---------------------------------------------------
                    INSTALLATION, REMOVAL AND REPLACEMENT OF
                    ----------------------------------------
                                PERSONAL PROPERTY
                                -----------------


         5.1 Ownership of the Leased Property. The Lessee acknowledges that the
Leased Property is the property of the Lessor and that, subject to the Permitted
Encumbrances, the Lessee has only the right to the exclusive possession and use
of the Leased Property upon the terms and conditions of this Lease.

         5.2 Personal Property; Removal and Replacement of Personal Property.

         5.2.1 Lessee To Equip Facility. The Lessee, at its sole cost and
expense, shall install, affix or assemble or place on the Leased Property,
sufficient items of Tangible Personal Property, in addition to the Lessor's
Personal Property, to enable the Leased Property to be operated, in accordance
with the requirements of this Lease for the Primary Intended Use, and such
Tangible Personal Property and replacements thereof, shall be at all times the
property of the Lessee.

         5.2.2 Sufficient Personal Property. The Lessee shall maintain, during
the entire Term, the Tangible Personal Property and the Lessor's Personal
Property in good order and repair and shall provide at its expense all necessary
replacements thereof, as may be necessary in order to operate the Leased
Property in compliance with all applicable Legal Requirements and Insurance
Requirements and otherwise in accordance with customary practice in the industry
for the Primary Intended Use. In addition, the Lessee shall (a) furnish all
necessary replacements of obsolete items of the Tangible Personal Property and
the Lessor's Personal Property during the Term, unless the Lessee provides the
Lessor with an explanation (reasonably acceptable to the Lessor) as to why such
Tangible Personal Property and/or the Lessor's Personal Property is no longer
required in connection with the operation of the Leased Property and (b) at
least once a year, deliver to the Lessor, a detailed inventory of all such
Tangible Personal Property and the Lessor's Personal Property.

         5.2.3 Removal and Replacement; Lessor's Option to Purchase. The Lessee
shall not remove from the Leased Property any one or more items of Tangible
Personal Property (whether now owned or hereafter acquired), the fair market
value of which exceeds FIFTY THOUSAND DOLLARS ($50,000), individually or TWO
HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00) collectively, except if such
Tangible Personal


                                       24

<PAGE>


Property is simultaneously suitably replaced or the Lessee provides the Lessor
with an explanation (reasonably satisfactory to the Lessor) as to why such
Tangible Personal Property is no longer required in connection with the
operation of the Leased Property. At its sole cost and expense, the Lessee shall
restore the Leased Property to the condition required by Article 8, including
repair of all damage to the Leased Property caused by the removal of the
Tangible Personal Property, whether effected by the Lessee or the Lessor. Upon
the expiration or earlier termination of this Lease, the Lessor shall have the
option, which may be exercised prior to or within sixty (60) days following such
expiration or termination, of (a) acquiring the Tangible Personal Property
(pursuant to a bill of sale and assignments of any equipment leases, all in such
forms as are reasonably satisfactory to the Lessor) upon payment of its book
value (the Lessee's cost, minus depreciation), but not in excess of its fair
market value or (b) requiring the Lessee to remove the Tangible Personal
Property. If the Lessor exercises its option to purchase the Tangible Personal
Property, the price to be paid by the Lessor shall be (i) reduced by the amount
of all payments due on any equipment leases or any other Permitted Prior
Security Interests assumed by the Lessor and (ii) applied to the Lease
Obligations before any payment to the Lessee. If the Lessor requires the removal
of the Tangible Personal Property, then all of the Tangible Personal Property
that is not removed by the Lessee within ten (10) days following such request
shall be considered abandoned by the Lessee and may be appropriated, sold,
destroyed or otherwise disposed of by the Lessor without first giving notice
thereof to the Lessee, without any payment to the Lessee and without any
obligation to account therefor.


                                    ARTICLE 6
                                    ---------

                         SECURITY FOR LEASE OBLIGATIONS
                         ------------------------------


         6.1 Security for Lessee's Obligations.

         6.1.1 Security. Notwithstanding anything to the contrary set forth
herein, in no event shall the Lessee be required to grant to the Lessor any
security interest in Receivables; provided, however, upon any Lease Default or
the expiration or earlier termination of this Lease, the Lessee shall provide
the Lessor with copies of its books and records relating to Receivables, even if
excluded from the security granted to the Lessor, so as to facilitate continuity
of patient and resident care and billing.

         6.1.2 Purchase-Money Security Interests and Equipment Leases.
Notwithstanding any other provision hereof regarding the creation of Liens, the
Lessee may (a) grant priority purchase money security interests in items of
Tangible Personal Property, (b) lease Tangible Personal Property from equipment
lessors and (c) grant security interests in Receivables to institutional
lenders. Security interests granted by the Lessee in full compliance with the
provisions of this Section 6.1.2 are referred to as "Permitted Prior Security
Interests."


                                       25

<PAGE>


                                    ARTICLE 7
                                    ---------

                      CONDITION AND USE OF LEASED PROPERTY;
                      -------------------------------------
                              MANAGEMENT AGREEMENTS
                              ---------------------


         7.1 Condition of the Leased Property. The Lessee acknowledges receipt
and delivery of possession of the Leased Property and that the Lessee has
examined and otherwise has acquired knowledge of the condition of the Leased
Property prior to the execution and delivery of this Lease and has found the
same to be in good order and repair and satisfactory for its purposes hereunder.
The Lessee is leasing the Leased Property "AS-IS" in its present condition. The
Lessee waives any claim or action against the Lessor in respect of the condition
of the Leased Property. THE LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS
OR IMPLIED, WITH RESPECT TO THE LEASED PROPERTY, EITHER AS TO ITS FITNESS FOR
ANY PARTICULAR PURPOSE OR USE, ITS DESIGN OR CONDITION OR OTHERWISE, OR AS TO
DEFECTS IN THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREIN, LATENT OR PATENT;
IT BEING AGREED THAT ALL RISKS RELATING TO THE DESIGN, CONDITION AND/OR USE OF
THE LEASED PROPERTY ARE TO BE BORNE BY THE LESSEE. THE LESSEE HEREBY ASSUMES ALL
RISK OF THE PHYSICAL CONDITION OF THE LEASED PROPERTY, THE SUITABILITY OF THE
LEASED PROPERTY FOR THE LESSEE'S PURPOSES, AND THE COMPLIANCE OR NON-COMPLIANCE
OF THE LEASED PROPERTY WITH ALL APPLICABLE REQUIREMENTS OF LAW, INCLUDING BUT
NOT LIMITED TO ENVIRONMENTAL LAWS AND ZONING OR LAND USE LAWS.

         7.2 Use of the Leased Property; Compliance; Management.

         7.2.1 Obligation to Operate. The Lessee shall continuously operate the
Leased Property in accordance with the Primary Intended Use and maintain its
qualifications for licensure and accreditation as required by all applicable
Legal Requirements and Insurance Requirements.

         7.2.2 Permitted Uses. During the entire Term, the Lessee shall use the
Leased Property, or permit the Leased Property to be used, only for the Primary
Intended Use. The Lessee shall not use the Leased Property or permit the Leased
Property to be used for any other use without the prior written consent of the
Lessor, which consent may be withheld in the Lessor's sole and absolute
discretion.

         7.2.3 Compliance With Insurance Requirements. No use shall be made or
permitted to be made of the Leased Property and no acts shall be done which will
cause the cancellation of any insurance policy covering the Leased Property, nor
shall the Lessee, any Manager or any other Person sell or otherwise provide to
any patients, residents, other occupants or invitees therein, or permit to be
kept, used or sold in or about the Leased


                                       26

<PAGE>


Property, any article which may be prohibited by any Legal Requirement or by any
of the Insurance Requirements. Furthermore, the Lessee shall, at its sole cost
and expense, take whatever other actions that may be necessary to comply with
and to insure that the Leased Property complies with all Insurance Requirements.

         7.2.4 No Waste. The Lessee shall not commit or suffer to be committed
any waste on, in or under the Leased Property, nor shall the Lessee cause or
permit any nuisance thereon.

         7.2.5 No Impairment. The Lessee shall neither suffer nor permit the
Leased Property to be used in such a manner as (a) might reasonably tend to
impair the Lessor's title thereto or (b) may reasonably make possible a claim or
claims of adverse usage or adverse possession by the public or of implied
dedication of the Leased Property.

         7.2.6 No Liens. Except as permitted pursuant to Section 6.1.2, the
Lessee shall not permit or suffer any Lien to exist on the Tangible Personal
Property and shall in no event cause, permit or suffer any Lien to exist with
respect to the Leased Property other than as set forth in Section 11.4.2.

         7.3 Compliance with Legal Requirements. Without limiting any of the
other terms or conditions set forth herein, the Lessee covenants and agrees that
the Leased Property shall not be used for any unlawful purpose and that the
Lessee, at its sole cost and expense, will promptly (a) comply with, and shall
cause every other member of the Leasing Group to comply with, all Legal
Requirements relating to the use, operation, maintenance, repair and restoration
of the Leased Property, whether or not compliance therewith shall require
structural change in any of the Leased Property or interfere with the use and
enjoyment of the Leased Property and (b) procure, maintain and comply with (in
all material respects), and shall cause every other member of the Leasing Group
to procure, maintain and comply with (in all material respects), all Contracts
and Permits necessary or desirable in order to operate the Leased Property for
the Primary Intended Use, and for compliance with all of the terms and
conditions of this Lease. Unless a Lease Default has occurred or any event has
occurred which, with the passage of time and/or the giving of notice would
constitute a Lease Default, the Lessee may, upon prior written notice to the
Lessor, contest any Legal Requirement to the extent permitted by, and in
accordance with, the provisions set forth in Article 15.

         7.4 Management Agreements. From and after the Commencement Date, the
Lessee shall not enter into any Management Agreement without the prior written
approval of the Lessor and the Fee Mortgagee (to the extent that any such
approval from any Fee Mortgagee is required under any Fee Mortgage Loan
Documents), in each instance, which approval from the Lessor shall not be
unreasonably withheld; provided, however, that, subject to the terms of any
applicable Fee Mortgage Loan Documents, the Lessee may enter into a Management
Agreement with an Affiliate of the Lessee without the approval of the Lessor.
The Lessee shall not, without the prior written approval of the Lessor and any
Fee


                                       27

<PAGE>


Mortgagee (to the extent that any such consent from any Fee Mortgagee is
required under any Fee Mortgage Loan Documents), in each instance, which
approval shall not be unreasonably withheld, agree to or allow: (a) any change
in the ownership or control of the Manager, to the extent that, subject to the
terms of the Management Agreement, any such change is prohibited or subject to
the Lessee's approval, (b) the termination of any Management Agreement, except
(i) if either party thereto exercises a right to terminate the Management
Agreement in accordance with its terms (unrelated to an allegation of a default)
or (ii) in connection with the exercise by the Lessee of any of its remedies
under the Management Agreement as a result of any default by the Manager
thereunder, (c) any assignment by the Manager of its interest under the
Management Agreement (except to an Affiliate of the Lessee) or (d) any material
amendment of the Management Agreement. In addition, the Lessee shall, at its
sole cost and expense, promptly and fully perform or cause to be performed every
covenant, condition, promise and obligation of the licensed operator of the
Leased Property under any Management Agreement.

         The Lessee shall furnish to the Lessor and any Fee Mortgagee, within
three (3) Business Days after receipt thereof, or after the mailing or service
thereof by the Lessee, as the case may be, a copy of each notice of default
which the Lessee shall give to, or receive from any Person, based upon the
occurrence, or alleged occurrence, of any default in the performance of any
covenant, condition, promise or obligation under any Management Agreement.

         Whenever and as often as the Lessee shall fail to perform, promptly and
fully, at its sole cost and expense, any covenant, condition, promise or
obligation on the part of the licensed operator of the Leased Property under and
pursuant to any Management Agreement, the Lessor, or a lawfully appointed
receiver of the Leased Property, or, subject to the terms of any applicable Fee
Mortgage Loan Documents, any Fee Mortgagee may, at their respective options (and
without any obligation to do so), after five (5) days' prior notice to the
Lessee (except in the case of an emergency, in which event, no notice shall be
required) enter upon the Leased Property and perform, or cause to be performed,
such work, labor, services, acts or things, and take such other steps and do
such other acts as they may deem advisable, to cure such defaulted covenant,
condition, promise or obligation, and any amount so paid or advanced by the
Lessor, such receiver or such Fee Mortgagee and all costs and expenses
reasonably incurred in connection therewith (including, without limitation,
attorneys' fees and expenses), shall be a demand obligation of the Lessee to the
Lessor, such receiver or such Fee Mortgagee, and, such parties shall have the
same rights and remedies for failure to pay such costs on demand as for the
Lessee's failure to pay any other sums due hereunder.


                                       28

<PAGE>


                                    ARTICLE 8
                                    ---------

                              REPAIRS; RESTRICTIONS
                              ---------------------

         8.1 Maintenance and Repair.

         8.1.1 Lessee's Responsibility. The Lessee, at its sole cost and
expense, shall keep the Leased Property and all private roadways, sidewalks and
curbs appurtenant thereto which are under the Lessee's control in good order and
repair (whether or not the need for such repairs occurs as a result of the
Lessee's use, any prior use, the elements or the age of the Leased Property or
such private roadways, sidewalks and curbs or any other cause whatsoever) and,
subject to Articles 9, 13 and 14, the Lessee shall promptly, with the exercise
of all reasonable efforts, undertake and diligently complete all necessary and
appropriate repairs, replacements, renovations, restorations, alterations and
modifications thereof of every kind and nature, whether interior or exterior,
structural or non-structural, ordinary or extraordinary, foreseen or unforeseen
or arising by reason of a condition (concealed or otherwise) existing prior to
the commencement of, or during, the Term and thereafter until the Lessee
surrenders the Leased Property in the manner required by this Lease. In
addition, the Lessee, at its sole cost and expense, shall make all repairs,
modifications, replacements, renovations and alterations of the Leased Property
(and such private roadways, sidewalks and curbs) that are necessary to comply
with all applicable Legal Requirements and Insurance Requirements so that the
Leased Property can be legally operated for the Primary Intended Use. All
repairs, replacements, renovations, alterations, and modifications required by
the terms of this Section 8.1 shall be (a) performed in a good and workmanlike
manner in compliance with all Legal Requirements, Insurance Requirements and the
requirements of Article 9 hereof and any applicable Fee Mortgage Loan Documents,
using new materials well suited for their intended purpose and (b) consistent
with the operation of the Leased Property in a first class manner. The Lessee
will not take or omit to take any action the taking or omission of which might
materially impair the value or the usefulness of the Leased Property for the
Primary Intended Use. To the extent that any of the repairs, replacements,
renovations, alterations or modifications required by the terms of this Section
8.1 constitute Material Structural Work, the Lessee shall obtain the Lessor's
prior written approval (which approval shall not be unreasonably withheld,
conditioned or delayed) of the specific repairs, replacements, renovations,
alterations and modifications to be performed by or on behalf of the Lessee in
connection with such Material Structural Work. Notwithstanding the foregoing, in
the event of a bona fide emergency during which the Lessee is unable to contact
the appropriate representatives of the Lessor, the Lessee may commence such
Material Structural Work as may be necessary in order to address such emergency
without the Lessor's prior approval; provided, however, that the Lessee shall
immediately thereafter advise the Lessor and any Fee Mortgagee of such emergency
and the nature and scope of the Material Structural Work commenced and shall
obtain the Lessor's approval of the remaining Material Structural Work to be
completed.


                                       29

<PAGE>


         8.1.2 No Lessor Obligation. The Lessor shall not, under any
circumstances, be required to build or rebuild any improvements on the Leased
Property (or any private roadways, sidewalks or curbs appurtenant thereto), or
to make any repairs, replacements, renovations, alterations, restorations,
modifications, or renewals of any nature or description to the Leased Property
(or any private roadways, sidewalks or curbs appurtenant thereto), whether
ordinary or extraordinary, structural or non-structural, foreseen or unforeseen,
or to make any expenditure whatsoever with respect thereto in connection with
this Lease, or to maintain the Leased Property (or any private roadways,
sidewalks or curbs appurtenant thereto) in any way.

         8.1.3 Lessee May Not Obligate Lessor. Nothing contained herein nor any
action or inaction by the Lessor shall be construed as (a) constituting the
consent or request of the Lessor, express or implied, to any contractor,
subcontractor, laborer, materialman or vendor to or for the performance of any
labor or services for any construction, alteration, addition, repair or
demolition of or to the Leased Property or (b) giving the Lessee any right,
power or permission to contract for or permit the performance of any labor or
services or the furnishing of any materials or other property in such fashion as
would permit the making of any claim against the Lessor for the payment thereof
or to make any agreement that may create, or in any way be the basis for, any
right, title or interest in, or Lien or claim against, the estate of the Lessor
in the Leased Property. Without limiting the generality of the foregoing, the
right title and interest of the Lessor in and to the Leased Property shall not
be subject to liens or encumbrances for the performance of any labor or services
or the furnishing of any materials or other property furnished to the Leased
Property at or by the request of the Lessee or any other Person other than the
Lessor. The Lessee shall notify any contractor, subcontractor, laborer,
materialman or vendor providing any labor, services or materials to the Leased
Property of this provision.


                                    ARTICLE 9
                                    ---------

                          MATERIAL STRUCTURAL WORK AND
                          ----------------------------
                                CAPITAL ADDITIONS
                                -----------------


         9.1 Lessor's Approval. Without the prior written consent of the Lessor,
which consent may be withheld by the Lessor, in its sole and absolute
discretion, the Lessee shall make no Capital Addition or Material Structural
Work to the Leased Property (including, without limitation, any change in the
size or unit capacity of the Facility), except as may be otherwise expressly
required pursuant to Article 8.

         9.2 General Provisions as to Capital Additions and Certain Material
Structural Work. As to any Capital Addition or Material Structural Work (other
than such Material Structural Work that is required to be performed pursuant to
the terms of Section 8.1) for which the Lessor has granted its prior written
approval, the following terms and conditions shall apply unless otherwise
expressly set forth in the Lessor's written approval.


                                       30

<PAGE>


         9.2.1 No Liens. The Lessee shall not be permitted to create any Lien on
the Leased Property in connection with any Capital Addition or Material
Structural Work.

         9.2.2 Lessee's Proposal Regarding Capital Additions and Material
Structural Work. If the Lessee desires to undertake any Capital Addition or
Material Structural Work, the Lessee shall submit to the Lessor in writing a
proposal setting forth in reasonable detail any proposed Capital Addition or
Material Structural Work and shall provide to the Lessor copies of, or
information regarding, the applicable plans and specifications, Permits,
Contracts and any other materials concerning the proposed Capital Addition or
Material Structural Work, as the case may be, as the Lessor may reasonably
request. Without limiting the generality of the foregoing, each such proposal
pertaining to any Capital Addition shall indicate the approximate projected cost
of constructing such Capital Addition, the use or uses to which it will be put
and a good faith estimate of the change, if any, in the Gross Revenues that the
Lessee anticipates will result from the construction of such Capital Addition.

         9.2.3 Lessor's Options Regarding Capital Additions and Material
Structural Work. The Lessor shall have the options of: (a) denying permission
for the construction of the applicable Capital Addition or Material Structural
Work, (b) offering to finance the construction of the Capital Addition or
Material Structural Work pursuant to Section 9.3, (c) allowing the Lessee to pay
for or separately finance the construction of the Capital Addition or Material
Structural Work, subject to compliance with the terms and conditions of Section
9.2.1, Section 9.4, Section 13.1, all Legal Requirements and all other
requirements of this Lease and to such other terms and conditions as the Lessor
may in its discretion impose or (d) any combination of the foregoing. Unless the
Lessor notifies the Lessee in writing of a contrary election within forty-five
(45) days of the Lessee's request, the Lessor shall be deemed to have denied the
request for the Capital Addition or Material Structural Work.

         9.2.4 Lessor May Elect to Finance Capital Additions or Material
Structural Work. If the Lessor elects to offer financing for the proposed
Capital Addition or Material Structural Work, the provisions of Section 9.3
shall apply.

         9.3 Capital Additions and Material Structural Work Financed by Lessor.

         9.3.1 Lessee's Financing Request. The Lessee may request that the
Lessor provide or arrange financing for a Capital Addition or Material
Structural Work by providing to the Lessor such information about the Capital
Addition or Material Structural Work as he Lessor may reasonably request,
including, without limitation, all information referred to in Section 9.2 above.
The Lessee understands, however, that the Lessor shall be under no obligation to
agree to such request. Nevertheless, the Lessor shall use reasonable efforts to
notify the Lessee, within forty-five (45) days of receipt of such information,
as to whether the Lessor will finance the proposed Capital Addition or Material
Structural Work and, if so, the terms and conditions upon which it would do so,
including the terms of any amendment to this Lease (including, without
limitation, an increase in Base Rent to compensate the Lessor for


                                       31

<PAGE>


the additional funds advanced by it). The Lessee may withdraw its request by
notice to the Lessor at any time before such time as the Lessee accepts the
Lessor's terms and conditions. All advances of funds for any such financing
shall be made in accordance with the requirements and procedures applicable to
Work under Section 13.1.

         9.3.2 Lessor's General Requirements. If the Lessor agrees to finance
the proposed Capital Addition or Material Structural Work and the Lessee accepts
the Lessor's proposal therefor, in addition to all other items which the Lessor
or any applicable Financing Party may reasonably require, the Lessee shall
provide to the Lessor the following:

         (a) prior to any advance of funds, (i) any information, opinions,
certificates, Permits or documents reasonably requested by the Lessor or any
applicable Financing Party which are necessary to confirm that the Lessee will
be able to use the Capital Addition upon the completion thereof or the
applicable portion of the Facility upon the completion of the Material
Structural Work in accordance with the Primary Intended Use and (ii) evidence
satisfactory to the Lessor and any applicable Financing Party that all Permits
required for the construction and use of the Capital Addition or the applicable
portion of the Facility have been obtained, are in full force and effect and are
not subject to appeal, except only for those Permits which cannot in the normal
course be obtained prior to commencement or completion of the construction;
provided, that the Lessor and any applicable Financing Party are furnished with
reasonable evidence that the same will be available in the normal course of
business without unusual condition;

         (b) prior to any advance of funds, an Officer's Certificate and, if
requested, a certificate from the Lessee's architect, setting forth in
reasonable detail the projected (or actual, if available) Capital Addition Cost
or the cost of the Material Structural Work;

         (c) bills of sale, instruments of transfer and other documents required
by the Lessor so as to vest title to the Capital Addition or the applicable
Material Structural Work in the Lessor free and clear of all Liens, and
amendments to this Lease and any recorded notice or memorandum thereof, duly
executed and acknowledged, in form and substance reasonably satisfactory to the
Lessor, providing for any changes required by the Lessor including, without
limitation, changes in the Base Rent and the legal description of the Land;

         (d) upon payment therefor, a deed conveying to the Lessor title to any
land acquired for the purpose of constructing the Capital Addition or the
applicable Material Structural Work (the "Additional Land") free and clear of
any Liens except those approved by the Lessor;

         (e) upon completion of the Capital Addition or the Material Structural
Work, a final as-built survey thereof reasonably satisfactory to the Lessor, if
required by the Lessor;

         (f) during and following the advance of funds and the completion of the
Capital Addition or the Material Structural Work, endorsements to any
outstanding policy of title


                                       32

<PAGE>


insurance covering the Leased Property satisfactory in form and substance to the
Lessor and any Financing Party (i) updating the same without any additional
exception except as may be reasonably permitted by the Lessor, (ii) if
applicable, including the Additional Land in the premises covered by such title
insurance policy and (iii) increasing the coverage thereof by an amount equal to
any amount paid by the Lessor for the Additional Land plus the Fair Market Value
of the Capital Addition or the Fair Market Value of the Material Structural Work
(except to the extent covered by the owner's policy of title insurance referred
to in subparagraph (g) below);

         (g) simultaneous with the initial advance of funds, if appropriate, (i)
an owner's policy of title insurance insuring fee simple title to any Additional
Land conveyed to the Lessor pursuant to subparagraph (d) free and clear of all
Liens except those approved by the Lessor and (ii) a lender's policy of title
insurance reasonably satisfactory in form and substance to any applicable
Financing Party;

         (h) following the completion of the Capital Addition or the Material
Structural Work, if reasonably deemed necessary by the Lessor, an appraisal of
the Leased Property by an M.A.I. appraiser acceptable to the Lessor, which
states that the Fair Market Value of the Leased Property upon completion of the
Capital Addition or the Material Structural Work exceeds the Fair Market Value
of the Leased Property prior to the commencement of the construction of such
Capital Addition or Material Structural Work by an amount not less than one
hundred five percent (105%) of the Capital Addition Cost or the cost of the
Material Structural Work; and

         (i) during or following the advancement of funds, prints of
architectural and engineering drawings relating to the Capital Addition or the
Material Structural Work and such other materials, including, without
limitation, endorsements to the title insurance policies (insuring the Lessor
and any applicable Financing Party with respect to the Leased Property)
contemplated by subsection (f) above, opinions of counsel, appraisals, surveys,
certified copies of duly adopted resolutions of the board of directors of the
Lessee authorizing the execution and delivery of the lease amendment and any
other documents and instruments as may be reasonably required by the Lessor and
any applicable Financing Party.

         9.3.3 Payment of Costs. By virtue of making a request to finance a
Capital Addition or any Material Structural Work, whether or not such financing
is actually consummated, the Lessee shall be deemed to have agreed to pay, upon
demand, all costs and expenses reasonably incurred by the Lessor and any Person
participating with the Lessor in any way in the financing of the Capital
Addition or Material Structural Work, including, but not limited to (a) fees and
expenses of their respective attorneys, (b) all photocopying expenses, if any,
(c) the amount of any filing, registration and recording taxes and fees, (d)
documentary stamp taxes and intangible taxes and (e) title insurance charges and
appraisal fees.


                                       33

<PAGE>


         9.4 General Limitations. Without in any way limiting the Lessor's
options with respect to proposed Capital Additions or Material Structural Work:
(a) no Capital Addition or Material Structural Work shall be completed that
could, upon completion, significantly alter the character or purpose or detract
from the value or operating efficiency of the Leased Property, or significantly
impair the revenue-producing capability of the Leased Property, or adversely
affect the ability of the Lessee to comply with the terms of this Lease, (b) no
Capital Addition or Material Structural Work shall be completed which would tie
in or connect any Leased Improvements on the Leased Property with any other
improvements on property adjacent to the Leased Property (and not part of the
Land covered by this Lease) including, without limitation, tie-ins of buildings
or other structures or utilities, unless the Lessee shall have obtained the
prior written approval of the Lessor, which approval may be withheld in the
Lessor's sole and absolute discretion and (c) all proposed Capital Additions and
Material Structural Work shall be architecturally integrated and consistent with
the Leased Property.

         9.5 Non-Capital Additions. The Lessee shall have the obligation and
right to make repairs, replacements and alterations which are not Capital
Additions as required by the other Sections of this Lease, but in so doing, the
Lessee shall always comply with and satisfy the conditions of Section 9.4,
mutatis, mutandis. The Lessee shall have the right, from time to time, to make
additions, modifications or improvements to the Leased Property which do not
constitute Capital Additions or Material Structural Work as it may deem to be
desirable or necessary for its uses and purposes, subject to the same limits and
conditions imposed under Section 9.4. The cost of any such repair, replacement,
alteration, addition, modification or improvement shall be paid by the Lessee
and the results thereof shall be included under the terms of this Lease and
become a part of the Leased Property, without payment therefor by the Lessor at
any time. Notwithstanding the foregoing, all such additions, modifications and
improvements which affect the structure of any of the Leased Improvements, or
which involve the expenditure of more than ONE HUNDRED THOUSAND DOLLARS
($100,000.00), shall be undertaken only upon compliance with the provisions of
Section 13.1, all Legal Requirements and all other applicable requirements of
this Lease; provided, however, that in the event of a bona fide emergency during
which the Lessee is unable to contact the appropriate representatives of the
Lessor, the Lessee may commence such additions, modifications and improvements
as may be necessary in order to address such emergency without the Lessor's
prior approval, as long as the Lessee immediately thereafter advises the Lessor
of such emergency and the nature and scope of the additions, modifications and
improvements performed and obtains the Lessor's approval of the remaining work
to be completed.



                                       34

<PAGE>



                                   ARTICLE 10
                                   ----------

                         WARRANTIES AND REPRESENTATIONS
                         ------------------------------


         10.1 Representations and Warranties. The Lessee hereby represents and
warrants to, and covenants and agrees with, the Lessor that:

         10.1.1 Existence; Power; Qualification. The Lessee is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. The Lessee has all requisite corporate power to own and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted and is duly qualified to transact business and is in
good standing in each jurisdiction where such qualification is necessary or
desirable in order to carry out its business as presently conducted and as
proposed to be conducted.

         10.1.2 Valid and Binding. The Lessee is duly authorized to make and
enter into all of the Lease Documents to which the Lessee is a party and to
carry out the transactions contemplated therein. All of the Lease Documents to
which the Lessee is a party have been duly executed and delivered by the Lessee,
and each is a legal, valid and binding obligation of the Lessee, enforceable in
accordance with its terms.

         10.1.3 Single Purpose. The Lessee is, and during the entire time that
this Lease remains in force and effect shall be, engaged in no business, trade
or activity other than the operation of the Leased Property for the Primary
Intended Use.

         10.1.4 No Violation. The execution, delivery and performance of the
Lease Documents and the consummation of the transactions thereby contemplated
shall not result in any breach of, or constitute a default under, or result in
the acceleration of, or constitute an event which, with the giving of notice or
the passage of time, or both, could result in default or acceleration of any
obligation of the Lessee under any of the Permits or Contracts or any other
contract, mortgage, lien, lease, agreement, instrument, franchise, arbitration
award, judgment, decree, bank loan or credit agreement, trust indenture or other
instrument to which the Lessee is a party or by which the Lessee or the Leased
Property may be bound or affected and do not violate or contravene any Legal
Requirement.

         10.1.5 Consents and Approvals. Except as already obtained or filed, as
the case may be, no consent or approval or other authorization of, or exemption
by, or declaration or filing with, any Person and no waiver of any right by any
Person is required to authorize or permit, or is otherwise required as a
condition of the execution and delivery of any of the Lease Documents by the
Lessee and the performance of the Lessee's obligations thereunder or as a
condition to the validity (assuming the due authorization, execution and
delivery by the Lessor of the Lease Documents to which it is a party).


                                       35

<PAGE>


         10.1.6 No Liens or Insolvency Proceedings. The Lessee is financially
solvent and there are no actions, suits, investigations or proceedings
including, without limitation, outstanding federal or state tax liens,
garnishments or insolvency or bankruptcy proceedings, pending or, to the best of
the Lessee's knowledge and belief, threatened:

         (a) against or affecting the Lessee, which if adversely resolved to the
Lessee, would materially adversely affect the ability of any of the foregoing to
perform their respective obligations under the Lease Documents;

         (b) against or affecting the Leased Property or the ownership,
construction, development, maintenance, management, repair, use, occupancy,
possession or operation thereof; or

         (c) which may involve or affect the validity, priority or
enforceability of any of the Lease Documents, at law or in equity, or before or
by any arbitrator or Governmental Authority.

         10.1.7 No Burdensome Agreements. The Lessee is not a party to any
agreement the terms of which now have, or, as far as can be reasonably foreseen,
may have, a material adverse affect on its respective financial condition or
business or on the operation of the Leased Property.

         10.1.8 Commercial Acts. The Lessee's performance of and compliance with
the obligations and conditions set forth herein and in the other Lease Documents
will constitute commercial acts done and performed for commercial purposes.

         10.1.9 Adequate Capital, Not Insolvent. After giving effect to the
consummation of the transactions contemplated by the Lease Documents, the
Lessee:

         (a) will be able to pay its debts as they become due;

         (b) will have sufficient funds and capital to carry on its business as
now conducted or as contemplated to be conducted (in accordance with the terms
of the Lease Documents);

         (c) will own property having a value both at fair valuation and at
present fair salable value greater than the amount required to pay its debts as
they become due; and

         (d) will not be rendered insolvent as determined by applicable law.

         10.1.10 Not Delinquent. The Lessee is not delinquent or claimed to be
delinquent under any obligation for the payment of borrowed money.

         10.1.11 No Affiliate Debt. The Lessee has not created, incurred,
guaranteed, endorsed, assumed or suffered to exist any liability (whether direct
or contingent) for


                                       36

<PAGE>


borrowed money from any Affiliate of the Lessee that is not fully subordinated
to the Lease Obligations pursuant to a written agreement in form and substance
acceptable to the Lessor.

         10.1.12 Taxes Current. The Lessee has filed all federal, state and
local tax returns which are required to be filed as to which extensions are not
currently in effect and have paid all taxes, assessments, impositions, fees and
other governmental charges (including interest and penalties) which have become
due pursuant to such returns or pursuant to any assessment or notice of tax
claim or deficiency received by the Lessee. No tax liability has been asserted
by the Internal Revenue Service against the Lessee or any other federal, state
or local taxing authority for taxes, assessments, impositions, fees or other
governmental charges (including interest or penalties thereon) in excess of
those already paid.

         10.1.13 Financials Complete and Accurate. The financial statements of
the Lessee given to the Lessor in connection with the execution and delivery of
this Lease were true, complete and accurate, in all material respects, and
fairly presented the financial condition of the Lessee as of the date thereof
and for the periods covered thereby, having been prepared in accordance with
GAAP and such financial statements disclosed all liabilities, including, without
limitation, contingent liabilities, of the Lessee.

         10.1.14 Pending Actions, Notices and Reports. There is no action or
investigation pending or, to the best knowledge and belief of the Lessee,
threatened, anticipated or contemplated (nor, to the knowledge of the Lessee, is
there any reasonable basis therefor) against or affecting the Lessee before any
Governmental Authority which could prevent or hinder the consummation of the
transactions contemplated hereby or call into question the validity of any of
the Lease Documents or any action taken or to be taken in connection with the
transactions contemplated thereunder.

         10.1.15 Compliance with Legal and Other Requirements. The Lessee has
obtained all Permits that are necessary or desirable to operate the Leased
Property in accordance with its Primary Intended Use and all such Permits are in
full force and effect.

         10.1.16 ERISA. No employee pension benefit plan maintained by the
Lessee has any accumulated funding deficiency within the meaning of the ERISA,
nor does the Lessee have any material liability to the PBGC established under
ERISA (or any successor thereto) in connection with any employee pension benefit
plan (or other class of benefit which the PBGC has elected to insure), and there
have been no "reportable events" (not waived) or "prohibited transactions" with
respect to any such plan, as those terms are defined in Section 4043 of ERISA
and Section 4975 of the Internal Revenue Code of 1986, as now or hereafter
amended, respectively.

         10.1.17 No Broker. Neither the Lessee nor any of its Affiliates has
dealt with any broker or agent in connection with the transactions contemplated
by the Lease Documents.


                                       37

<PAGE>


         10.1.18 No Improper Payments. Neither the Lessee nor any of its
Affiliates has:

         (a) made any contributions, payments or gifts of its funds or property
to or for the private use of any government official, employee, agent or other
Person where either the payment or the purpose of such contribution, payment or
gifts is illegal under the laws of the United States, any state thereof or any
other jurisdiction (foreign or domestic);

         (b) established or maintained any unrecorded fund or asset for any
purpose or has made any false or artificial entries on any of its books or
records for any reason;

         (c) made any payments to any Person with the intention or understanding
that any part of such payment was to be used for any other purpose other than
that described in the documents supporting the payment; or

         (d) made any contribution, or has reimbursed any political gift or
contribution made by any other Person, to candidates for public office, whether
federal, state or local, where such contribution would be in violation of
applicable law.

         10.1.19 Nothing Omitted. Neither this Lease, nor any of the other Lease
Documents, nor any certificate, agreement, statement or other document,
including, without limitation, any financial statements concerning the financial
of the Lessee, furnished to or to be furnished to the Lessor or its attorneys in
connection with the transactions contemplated by the Lease Documents, contains
or will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to prevent all statements contained
herein and therein from being misleading. There is no fact within the special
knowledge of the Lessee which has not been disclosed herein or in writing to the
Lessor that materially adversely affects, or in the future, insofar as the
Lessee can reasonably foresee, may materially adversely affect the business,
properties, assets or condition, financial or otherwise, of the Lessee.

         10.1.20 No Default. No event or state of facts which constitutes, or
which, with notice or lapse of time, or both, could constitute, a Lease Default
has occurred and is continuing.

         10.1.21 Principal Place of Business. The principal place of business
and chief executive office of the Lessee is located at 197 First Avenue,
Needham, Massachusetts 02194 (the "Principal Place of Business").

         10.1.22 Management Agreements. There is no Management Agreement in
force and effect as of the date hereof, except the Current Management Agreement.

         10.2 Continuing Effect of Representations and Warranties. All
representations and warranties contained in this Lease and the other Lease
Documents shall constitute


                                       38

<PAGE>


continuing representations and warranties which shall remain true, correct and
complete throughout the Term. Notwithstanding the provisions of the foregoing
sentence but without derogation from any other terms and provisions of this
Lease, including, without limitation, those terms and provisions containing
covenants to be performed or conditions to be satisfied on the part of the
Lessee, the representations and warranties contained in Sections 10.1.6, 10.1.7,
10.1.10, 10.1.11, 10.1.12, 10.1.14, 10.1.16 and 10.1.22 shall not constitute
continuing representations and warranties throughout the Term.


                                   ARTICLE 11
                                   ----------

                          FINANCIAL AND OTHER COVENANTS
                          -----------------------------

         11.1 Status Certificates. At any time, and from time to time, upon
request from the Lessor, the Lessee shall furnish to the Lessor, within ten (10)
Business Days' after receipt of such request (or such shorter period of time as
may be required under any applicable Fee Mortgage Loan Documents, an Officer's
Certificate certifying that this Lease is unmodified and in full force and
effect (or that this Lease is in full force and effect as modified and setting
forth the modifications) and the dates to which the Rent has been paid. Any
Officer's Certificate furnished pursuant to this Section shall be addressed to
any prospective purchaser of the Leased Property or any Fee Mortgagee as the
Lessor may request and may be relied upon by the Lessor and any such prospective
purchaser or Fee Mortgagee.

         11.2 Financial Statements; Reports; Notice and Information.

         11.2.1 Obligation To Furnish. The Lessee will furnish and shall cause
to be furnished to the Lessor the following statements, information and other
materials:

         (a) Annual Statements. Within ninety (90) days after the end of each of
their respective fiscal years or such earlier period as may be required under
the HUD Regulatory Agreement or any other HUD Financing Document, (i) a copy of
the unaudited Consolidated Financials for each of (x) the Lessee and (y) any
Sublessee for the preceding fiscal year, and certified as true and correct by
the Lessee or the applicable Sublessee, as the case may be (and, without
limiting anything else contained herein, the Consolidated Financials for the
Lessee and for each Sublessee shall include a detailed balance sheet for Leased
Property as of the last day of such fiscal year and a statement of earnings from
the Leased Property for such fiscal year showing, among other things, all rents
and other income therefrom and all expenses paid or incurred in connection with
the operation of the Leased Property); (ii) separate statements, certified as
true and correct by the Lessee and each Sublessee, stating whether, to the best
of the signer's knowledge and belief after making due inquiry, the Lessee or
such Sublessee, as the case may be, is in default in the performance or
observance of any of the terms of this Lease or any of the other Lease Documents
and, if so, specifying all such defaults, the nature thereof and the steps being
taken to immediately


                                       39

<PAGE>


remedy the same; and (iii) a statement certified as true and correct by the
Lessee setting forth all Subleases (excluding Resident Agreements) as of the
last day of such fiscal year, the respective areas demised thereunder, the names
of the Sublessees thereunder, the respective expiration dates of such Subleases,
the respective rentals provided for therein, and such other information
pertaining to such Subleases as may be reasonably requested by the Lessor.

         (b) Permits and Contracts. Promptly after the issuance or the execution
thereof, as the case may be, true and complete copies of (i) all Permits which
constitute operating licenses for the Facility issued by any Governmental
Authority having jurisdiction over health care and/or assisted living matters
and (ii) Contracts (involving payments in the aggregate in excess of $200,000
per annum).

         (c) Contract Notices. Promptly after the receipt thereof, true and
complete copies of any notices, consents, terminations or statements of any kind
or nature relating to any of the Contracts (involving payments in the aggregate
in excess of $200,000 per annum) other than those issued in the ordinary course
of business.

         (d) Permit or Contract Defaults. Promptly after the receipt thereof,
true and complete copies of all surveys, follow-up surveys, licensing surveys,
complaint surveys, examinations, compliance certificates, inspection reports,
statements (other than those statements that are issued in the ordinary course
of business), terminations and notices of any kind (other than those notices
that are furnished in the ordinary course of business) issued or provided to the
Lessee or any Sublessee by any Governmental Authority, including, without
limitation, any notices pertaining to any delinquency in, or proposed revision
of, the Lessee's or any Sublessee's obligations under the terms and conditions
of any Permits or Contracts now or hereafter issued by or entered into with any
Governmental Authority and the response(s) thereto made by or on behalf of the
Lessee or any Sublessee.

         (e) Official Reports. Upon completion or filing thereof, complete
copies of all applications (other than those that are furnished in the ordinary
course of business), notices (other than those that are furnished in the
ordinary course of business), statements, annual reports, cost reports and other
reports or filings of any kind (other than those that are furnished in the
ordinary course of business) provided by the Lessee or any Sublessee to any
Governmental Authority with respect to the Leased Property.

         (f) Other Information. With reasonable promptness, such other
information as the Lessor may from time to time reasonably request respecting
(i) the financial condition and affairs of each member of the Leasing Group and
the Leased Property and (ii) the licensing and operation of the Leased Property;
including, without limitation, audited financial statements, certificates and
consents from accountants and all other financial and licensing/operational
information as may be required or requested by any Governmental Authority.


                                       40

<PAGE>


         (g) Default Conditions. As soon as possible, and in any event within
five (5) days after the occurrence of any Lease Default, or any event or
circumstance which, with the giving of notice or the passage of time, or both,
could constitute a Lease Default, a written statement of the Lessee setting
forth the details of such Lease Default, event or circumstance and the action
which the Lessee proposes to take with respect thereto.

         (h) Official Actions. Promptly after the commencement thereof, notice
of all actions, suits and proceedings before any Governmental Authority which
could have a material adverse effect on (i) Lessee to perform any of its
obligations under any of the Lease Documents or (ii) the Leased Property.

         (i) Adverse Developments. Promptly after the Lessee acquires knowledge
thereof, written notice of:

                  (i) the potential termination of any Permit necessary for the
operation of the Leased Property;

                  (ii) any loss, damage or destruction to or of the Leased
Property in excess of ONE HUNDRED THOUSAND DOLLARS ($100,000) (regardless of
whether the same is covered by insurance);

                  (iii) any material controversy involving the Lessee or any
Sublessee and (x) Facility administrator or Facility employee of similar stature
or (y) any labor organization; and

                  (iv) any fact within the special knowledge of any member of
the Leasing Group, or any other development in the business or affairs of any
member of the Leasing Group, which may be materially adverse to the business,
properties, assets or condition, financial or otherwise, of any member of the
Leasing Group or the Leased Property.

         (j) Responses To Inspection Reports. Within thirty (30) days after
receipt of an inspection report relating to the Leased Property from the Lessor,
a written response describing in detail prepared plans to address concerns
raised by the inspection report.

         (k) Financial Information Required Under Any Fee Mortgage Loan
Documents. The Lessee shall provide to any Fee Mortgagee any information that is
required to be delivered to such Fee Mortgagee pursuant to any Fee Mortgage Loan
Documents respecting (i) the financial condition and affairs of each member of
the Leasing Group and the Leased Property and (ii) the licensing and operation
of the Leased Property; including, without limitation, audited financial
statements, certificates and consents from accountants and all other financial
and licensing/operational information.

         11.2.2 Responsible Officer. Any certificate, instrument, notice, or
other document to be provided to the Lessor hereunder by any member of the
Leasing Group shall


                                       41

<PAGE>


be signed by an executive officer of such member (in the event that any of the
foregoing is not an individual), having a position of Vice President or higher
and with respect to financial matters, any such certificate, instrument, notice
or other document shall be signed by the chief financial officer of such member.

         11.2.3 No Material Omission. No certificate, instrument, notice or
other document, including without limitation, any financial statements furnished
or to be furnished to the Lessor pursuant to the terms hereof or of any of the
other Lease Documents shall contain any untrue statement of a material fact or
shall omit to state any material fact necessary in order to prevent all
statements contained therein from being misleading.

         11.2.4 Confidentiality. The Lessor shall afford any information
received pursuant to the provisions of the Lease Documents the same degree of
confidentiality that the Lessor affords similar information proprietary to the
Lessor; provided, however, that the Lessor does not in any way warrant or
represent that such information received from any member of the Leasing Group
shall remain confidential (and shall not be liable in any way for any subsequent
disclosure of such information by any Person that the Lessor has provided such
information in accordance with the terms hereof) and provided, further, that the
Lessor shall have the unconditional right to (a) disclose any such information
as the Lessor deems necessary or appropriate in connection with any sale,
transfer, conveyance, participation or assignment of the Leased Property or any
of the Lease Documents or any interest therein and (b) use such information in
any litigation or arbitration proceeding between the Lessor and any member of
the Leasing Group. Without limiting the foregoing, the Lessor may also utilize
any information furnished to it hereunder as and to the extent (i) counsel to
the Lessor determines that such utilization is necessary pursuant to 15 U.S.C.
77a-77aa or 15 U.S.C. 78a-78jj and the rules and regulations promulgated
thereunder, (ii) the Lessor is required or requested by any Governmental
Authority to disclose any such information and/or (iii) the Lessor is requested
to disclose any such information by any of its lenders or potential lenders. The
Lessor shall not be liable in any way for any subsequent disclosure of such
information by any Person to whom the Lessor provided such information in
accordance with the terms hereof. Nevertheless, in connection with any such
disclosure, the Lessor shall inform the recipient of any such information of the
confidential nature thereof. The Lessor shall observe any prohibitions or
limitations on the disclosure of any such information under applicable
confidentiality law or regulations, to the extent that the same are applicable
to such information, including, without limitation, any duly enacted "Patients'
Bill of Rights" or similar legislation, including such limitations as may be
necessary to preserve the confidentiality of the facility-patient/resident
relationship and the physician-patient privilege.

         11.3 Affirmative Covenants. The Lessee covenants and agrees that
throughout the Term and any periods thereafter that the Lessee remains in
possession of the Leased Property:

         11.3.1 Maintenance of Existence. During the entire time that this Lease
remains in full force and effect, the Lessee shall keep in effect its existence
and rights as a


                                       42

<PAGE>


corporation under the laws of the state of its incorporation and its right to
own property and transact business in the State.

         11.3.2 Materials. The Lessee covenants to cause to be paid punctually
all sums becoming due for labor, materials, fixtures or equipment used or
purchased in connection with any renovations or construction relating to the
Leased Property, subject to the Lessee's right to contest to the extent provided
for in Article 15.

         11.3.3 Compliance With Legal Requirements And Applicable Agreements.
The Lessee and the Leased Property and all uses thereof shall comply with (i)
all Legal Requirements, (ii) all Permits and Contracts, (iii) all Insurance
Requirements, (iv) the Lease Documents, (v) the Permitted Encumbrances, (vi) the
Appurtenant Agreements and (vii) the Fee Mortgage Loan Documents.

         11.3.4 Books And Records. The Lessee shall cause to be kept and
maintained, and shall permit the Lessor, any Fee Mortgagee and their respective
representatives to inspect at all reasonable times, accurate books of accounts
in which complete entries will be made in accordance with GAAP reflecting all
financial transactions of the Lessee (showing, without limitation, all materials
ordered and received and all disbursements, accounts payable and accounts
receivable in connection with the operation of the Leased Property).

         In addition and without limiting the foregoing or any other provision
set forth herein, the Lessee agrees to maintain such books and records and make
them available for inspection, audit, and copying in such manner and for such
time as required by applicable laws and responsible businesses practices. As a
subcontractor that may be subject to Section 1861(v) (1) (i) of the Social
Security Act (the "Act"), the Lessee shall, upon written request and in
accordance with the above-mentioned section of the Act and regulations
promulgated pursuant thereto, make available to the Comptroller General, the
Secretary of Health and Human Services, and their duly authorized
representatives, a copy of this Lease and access to the Lessee's books,
documents, and records necessary to verify the nature and extent of the costs of
services provided to the Lessor. Such access will be available until the
expiration of four (4) years after the services to which the costs are related
have been furnished.

         The provisions of this Section shall apply only if this Lease is
covered by the Act and such provisions shall become void and shall be of no
further force or effect if, at the time a request is made, this Lease is not
subject to the Act. The Lessee agrees that if it carries out any of the duties
of this Lease through a subcontract with a related organization which
subcontract has a value or cost of TEN THOUSAND DOLLARS ($10,000) or more over a
twelve (12) month period, the Lessee will obtain an identical access requirement
in such subcontract.

         11.3.5 Conduct of its Business. The Lessee will maintain, and cause any
Sublessee and any Manager to maintain, experienced and competent professional
management


                                       43

<PAGE>


with respect to its business and with respect to the Leased Property. The
Lessee, any Sublessee and any Manager shall conduct, in the ordinary course, the
operation of the Facility, and the Lessee and any Sublessee shall not enter into
any other business or venture during the Term or such time as the Lessee or any
Sublessee is in possession of the Leased Property.

         11.3.6 Address. The Lessee shall provide the Lessor thirty (30) days'
prior written notice of any change of its Principal Place of Business from its
current Principal Place of Business. The Lessee shall maintain all books and
records relating to its business, solely at its Principal Place of Business and
at the Leased Property. The Lessee provide the Lessor with ten (10) days' notice
prior to (a) removing any books or records relating to the Lessee's business
from either the Leased Property or the Lessee's Principal Place of Business or
(b) relocating its Principal Place of Business.

         11.3.7 Subordination of Affiliate Transactions. Without limiting the
provisions of any other Section of this Lease, any payments to be made by the
Lessee to (a) any member of the Leasing Group (or any Affiliate of any member of
the Leasing Group) or (b) any Affiliate of the Lessee, in connection with any
transaction between the Lessee and such Person, including, without limitation,
the purchase, sale or exchange of any property, the rendering of any service to
or with any such Person (including, without limitation, all allocations of any
so-called corporate or central office costs, expenses and charges of any kind or
nature) or the making of any loan or other extension of credit or the making of
any equity investment, shall be subordinate to the complete payment and
performance of the Lease Obligations; provided, however, that, subject to any
limitations set forth under any applicable Fee Mortgage Loan Documents, all such
subordinated payments may be paid at any time unless: (x) after giving effect to
such payment, the Lessee shall be unable to comply with any of its obligations
under any of the Lease Documents or (y) a Lease Default has occurred and is
continuing and has not been expressly waived in writing by the Lessor or an
event or state of facts exists, which, with the giving of notice or the passage
of time, or both, would constitute a Lease Default.

         11.3.8 Inspection. At reasonable times and upon reasonable notice, the
Lessee shall permit the Lessor, any Fee Mortgagee and their respective
representatives (including, without limitation, the Consultants) to inspect the
Leased Property.

         11.3.9 HUD Financing Documents. Notwithstanding anything to the
contrary contained in the HUD Financing Documents, and, without limiting the
provisions of Section 3.1, Lessee shall fully and timely perform all of the
Lessor's obligations under the HUD Financing Documents (other than any
obligation thereunder requiring Lessor to maintain its existence as a limited
partnership under the laws of the State) and shall not cause, or allow there to
exist, any default thereunder (other than any such default relating to the
solvency of Lessor or any failure by Lessor to maintain its existence as a
limited partnership under the State).


                                       44

<PAGE>


         11.4 Additional Negative Covenants. The Lessee covenants and agrees
that, throughout the Term and such time as the Lessee remains in possession of
the Leased Property:

         11.4.1 Restrictions Relating to Lessee. Except as may otherwise be
expressly provided in Section 19.2 and Section 19.4 or in any of the other Lease
Documents, the Lessee shall not, without the prior written consent of the
Lessor, in each instance, which consent may be withheld in the sole and absolute
discretion of the Lessor and any other consents that may be required under any
of the HUD Financing Documents:

         (a) convey, assign, hypothecate, transfer, dispose of or encumber, or
permit the conveyance, assignment, transfer, hypothecation, disposal or
encumbrance of all or any part of any legal or beneficial interest in this Lease
or the Leased Property; provided, however, that this restriction shall not apply
to the Permitted Encumbrances that may be created after the date hereof pursuant
to the Lease Documents;

         (b) permit the use of the Facility for any purpose other than the
Primary Intended Use; or

         (c) liquidate, dissolve or merge or consolidate with any other Person.

         11.4.2 No Liens. The Lessee will not directly or indirectly create or
allow to remain and will promptly discharge at its expense any Lien, title
retention agreement or claim upon or against the Leased Property (including the
Lessee's interest therein) or the Lessee's interest in this Lease or any of the
other Lease Documents, or in respect of the Rent, excluding (a) this Lease and
any permitted Subleases, (b) the Permitted Encumbrances, (c) Liens which are
consented to in writing by the Lessor, (d) Liens for those taxes of the Lessor
which the Lessee is not required to pay hereunder, (e) Liens of mechanics,
laborers, materialmen, suppliers or vendors for sums either not yet due or being
contested in strict compliance with the terms and conditions of Article 15, (f)
any Liens which are the responsibility of the Lessor pursuant to the provisions
of Article 20, (g) Liens for Impositions which are either not yet due and
payable or which are in the process of being contested in strict compliance with
the terms and conditions of Article 15 and (h) involuntary Liens caused by the
actions or omissions of the Lessor.

         11.4.3 Limits on Affiliate Transactions. The Lessee shall not enter
into any transaction with any Affiliate, including, without limitation, the
purchase, sale or exchange of any property, the rendering of any service to or
with any Affiliate and the making of any loan or other extension of credit,
except in the ordinary course of, and pursuant to the reasonable requirements
of, the Lessee's business and upon fair and reasonable terms no less favorable
to the Lessee than would be obtained in a comparable arms'-length transaction
with any Person that is not an Affiliate.


                                       45

<PAGE>


         11.4.4 No Default. The Lessee shall not commit any default or breach
under any of the Lease Documents.

         11.4.5 ERISA. The Lessee shall not establish or permit any Sublessee to
establish any new pension or defined benefit plan or modify any such existing
plan for employees subject to ERISA, which plan provides any benefits based on
past service without the advance consent of the Lessor to the amount of the
aggregate past service liability thereby created.

         11.4.6 Forgiveness of Indebtedness. The Lessee will not waive, or
permit any Sublessee or Manager which is an Affiliate to waive any debt or
claim, except in the ordinary course of its business.

         11.4.7 Value of Assets. Except as disclosed in the financial statements
provided to the Lessor as of the date hereof, the Lessee will not write up (by
creating an appraisal surplus or otherwise) the value of any assets of the
Lessee above their cost to the Lessee, less the depreciation regularly allowable
thereon.

         11.4.8 Changes in Fiscal Year and Accounting Procedures. The Lessee
shall not, without the prior written consent of the Lessor, in each instance,
which consent may be withheld in the Lessor's reasonable discretion (a) change
its fiscal year or capital structure or (b) change, alter, amend or in any
manner modify, except in accordance with GAAP, any of its current accounting
procedures related to the method of revenue recognition, billing procedures or
determinations of doubtful accounts or bad debt expenses.


                                   ARTICLE 12
                                   ----------

                             INSURANCE AND INDEMNITY
                             -----------------------

         12.1 General Insurance Requirements. During the Term of this Lease and
thereafter until the Lessee surrenders the Leased Property in the manner
required by this Lease, the Lessee shall at its sole cost and expense keep the
Leased Property, the Tangible Personal Property and the Lessor's Personal
Property located thereon and the business operations conducted on the Leased
Property insured as set forth below.

         12.1.1 Types and Amounts of Insurance. The Lessee's insurance shall
include the following:

         (a) property loss and physical damage insurance on an all-risk basis
(with only such exceptions as the Lessor may in its reasonable discretion
approve) covering the Leased Property (exclusive of Land) for its full
replacement cost, which cost shall be reset once a year at the Lessor's option,
with an agreed-amount endorsement and a deductible not in excess of TEN THOUSAND
DOLLARS ($10,000.00). Such insurance shall include,


                                       46

<PAGE>


without limitation, contingent liability from the operation of building laws,
less exclusions provided in the normal "All Risk" insurance policy. During any
period of construction, such insurance shall be on a builder's-risk, completed
value, non-reporting form with permission to occupy;

         (b) flood insurance (if the Leased Property or any portion thereof is
situated in an area which is considered a flood risk area by the U.S. Department
of Housing and Urban Development or any other Governmental Authority that may in
the future have jurisdiction over flood risk analysis) in limits acceptable to
the Lessor;

         (c) boiler and machinery insurance (including related electrical
apparatus and components) under a standard comprehensive form, providing
coverage against loss or damage caused by explosion of steam boilers, pressure
vessels or similar vessels, now or hereafter installed on the Leased Property,
in limits acceptable to the Lessor;

         (d) business interruption and/or rent loss insurance in an amount equal
to the annual Base Rent due hereunder plus the aggregate sum of the Impositions
relating to the Leased Property due and payable during one year;

         (e) comprehensive general public liability insurance including
coverages commonly found in the Broad Form Commercial Liability Endorsements
with amounts not less than TEN MILLION DOLLARS ($10,000,00) of umbrella
coverage;

         (f) physical damage insurance on an all-risk basis (with only such
exceptions as the Lessor in its reasonable discretion shall approve) covering
the Tangible Personal Property for the full replacement cost thereof and with a
deductible not in excess of one percent (1%) of the full replacement cost
thereof;

         (g) Workers' Compensation and Employers' Liability Insurance providing
protection against all claims arising out of injuries to all employees of the
Lessee or of any Sublessee (employed on the Leased Property or any portion
thereof) in amounts equal for Workers' Compensation, to the statutory benefits
payable to employees in the State and for Employers' Liability, to limits of not
less than ONE HUNDRED THOUSAND DOLLARS ($100,000) for injury by accident, ONE
HUNDRED THOUSAND DOLLARS ($100,000) per employee for disease and FIVE HUNDRED
THOUSAND DOLLARS ($500,000) disease policy limit;

         (h) such other insurance as the Lessor from time to time may reasonably
require and also, as may from time to time be required by applicable Legal
Requirements and/or by any Fee Mortgagee.

         12.1.2 Insurance Company Requirements. All such insurance required by
this Lease or the other Lease Documents shall be issued and underwritten by
insurance


                                       47

<PAGE>


companies licensed to do insurance business by, and in good standing under the
laws of, the State and which companies have and maintain a rating of A-X or
better by A.M. Best Co.

         12.1.3 Policy Requirements. Every policy of insurance from time to time
required under this Lease or any of the other Lease Documents (other than
worker's compensation) shall name the Lessor as owner, loss payee, secured party
(to the extent applicable) and additional named insured as its interests may
appear. If an insurance policy covers properties other than the Leased Property,
then the Lessor shall be so named with respect only to the Leased Property. Each
such policy, where applicable or appropriate, shall:

         (a) include an agreed amount endorsement and loss payee, additional
named insured and secured party endorsements, in forms acceptable to the Lessor
in its sole and absolute discretion;

         (b) include mortgagee, secured party, loss payable and additional named
insured endorsements reasonably acceptable to each Fee Mortgagee;

         (c) provide that the coverages may not be canceled or materially
modified except upon thirty (30) days' prior written notice to the Lessor and
any Fee Mortgagee;

         (d) be payable to the Lessor and any Fee Mortgagee notwithstanding any
defense or claim that the insurer may have to the payment of the same against
any other Person holding any other interest in the Leased Property;

         (e) be endorsed with standard noncontributory clauses in favor of and
in form reasonably acceptable to the Lessor and any Fee Mortgagee;

         (f) expressly waive any right of subrogation on the part of the insurer
against the Lessor, any Fee Mortgagee or the Leasing Group; and

         (g) otherwise be in such forms as shall be reasonably acceptable to the
Lessor and any Fee Mortgagee.

         12.1.4 Notices; Certificates and Policies. The Lessee shall promptly
provide to the Lessor copies of any and all notices (including notice of
non-renewal), claims and demands which the Lessee receives from insurers of the
Leased Property. At least ten (10) days prior to the expiration of any insurance
policy required hereunder, the Lessee shall deliver to the Lessor certificates
and evidence of insurance relating to all renewals and replacements thereof,
together with evidence, satisfactory to the Lessor, of payment of the premiums
thereon. The Lessee shall deliver to the Lessor original counterparts or copies
certified by the insurance company to be true and complete copies, of all
insurance policies required hereunder not later than the earlier to occur of (a)
ninety (90) days after the effective date of each such policy and (b) ten (10)
days after receipt thereof by the Lessee.


                                       48

<PAGE>


         12.1.5 Lessor's Right to Place Insurance. If the Lessee shall fail to
obtain any insurance policy required hereunder by the Lessor, or shall fail to
deliver the certificate and evidence of insurance relating to any such policy to
the Lessor, or if any insurance policy required hereunder (or any part thereof)
shall expire or be canceled or become void or voidable by reason of any breach
of any condition thereof, or if the Lessor determines that such insurance
coverage is unsatisfactory by reason of the failure or impairment of the capital
of any insurance company which wrote any such policy, upon demand by the Lessor,
the Lessee shall promptly obtain new or additional insurance coverage on the
Leased Property, or for those risks required to be insured by the provisions
hereof, satisfactory to the Lessor, and, at its option, the Lessor may obtain
such insurance and pay the premium or premiums therefor; in which event, any
amount so paid or advanced by the Lessor and all costs and expenses incurred in
connection therewith (including, without limitation, attorneys' fees and
expenses), shall be a demand obligation of the Lessee to the Lessor, payable as
an Additional Charge.

         12.1.6 Payment of Proceeds. All insurance policies required hereunder
(except for general public liability, professional liability and workers'
compensation and employers liability insurance) shall provide that in the event
of loss, injury or damage, subject to the rights of any Fee Mortgagee, all
proceeds shall be paid to the Lessor alone (rather than jointly to the Lessee
and the Lessor). The Lessor is hereby authorized to adjust and compromise any
such loss with the consent of the Lessee or, following any Lease Default,
whether or not cured, without the consent of the Lessee, and to collect and
receive such proceeds in the name of the Lessor and the Lessee, and the Lessee
appoints the Lessor (or any agent designated by the Lessor) as the Lessee's
attorney-in-fact with full power of substitution, to endorse the Lessee's name
upon any check in payment thereof. Subject to the provisions of Article 13, such
insurance proceeds shall be applied first toward reimbursement of all costs and
expenses reasonably incurred by the Lessor in collecting said insurance
proceeds, then toward payment of the Lease Obligations or any portion thereof,
then due and payable, in such order as the Lessor determines, and then in whole
or in part toward restoration, repair or reconstruction of the Leased Property
for which such insurance proceeds shall have been paid.

         12.1.7 Irrevocable Power of Attorney. The power of attorney conferred
on the Lessor pursuant to the provisions of this Section 12.1, being coupled
with an interest, shall be irrevocable for as long as this Lease is in effect or
any Lease Obligations are outstanding, shall not be affected by any disability
or incapacity which the Lessee may suffer and shall survive the same. Such power
of attorney, is provided solely to protect the interests of the Lessor and shall
not impose any duty on the Lessor to exercise any such power, and neither the
Lessor nor such attorney-in-fact shall be liable for any act, omission, error in
judgment or mistake of law, except as the same may result from its gross
negligence or willful misconduct.

         12.1.8 Blanket Policies. Notwithstanding anything to the contrary
contained herein, the Lessee's obligations to carry the insurance provided for
herein may be brought


                                       49

<PAGE>


within the coverage of a so-called blanket policy or policies of insurance
carried and maintained by the Lessee and its Affiliates; provided, however, that
the coverage afforded to the Lessor shall not be reduced or diminished or
otherwise be different from that which would exist under a separate policy
meeting all other requirements of this Lease by reason of the use of such
blanket policy of insurance, and provided, further that the requirements of this
Section 12.1 are otherwise satisfied.

         12.1.9 No Separate Insurance. The Lessee shall not, on the Lessee's own
initiative or pursuant to the request or requirement of any other Person, take
out separate insurance concurrent in form or contributing in the event of loss
with the insurance required hereunder to be furnished by the Lessee, or increase
the amounts of any then existing insurance by securing an additional policy or
additional policies, unless (a) all parties having an insurable interest in the
subject matter of the insurance, including the Lessor, are included therein as
additional insureds and (b) losses are payable under said insurance in the same
manner as losses are required to be payable under this Lease. The Lessee shall
immediately notify the Lessor of the taking out of any such separate insurance
or of the increasing of any of the amounts of the then existing insurance by
securing an additional insurance policy or policies.

         12.1.10 Assignment of Unearned Premiums. The Lessee hereby assigns to
the Lessor all rights of the Lessee in and to any unearned premiums allocable to
the Leased Property on any insurance policy required hereunder to be furnished
by the Lessee which may become payable or are refundable after the occurrence of
an Event of Default hereunder. In the event that this Lease is terminated for
any reason (other than the purchase of the Leased Property by the Lessee or the
expiration of this Lease at the end of the Term), the insurance policies
required to be maintained hereunder, including all right, title and interest of
the Lessee thereunder, shall become the absolute property of the Lessor.

         12.2 Indemnity.

         12.2.1 Indemnification. Except with respect to the gross negligence or
willful misconduct of the Lessor or any of the other Indemnified Parties, as to
which no indemnity is provided, the Lessee hereby agrees to defend, indemnify
and hold harmless the Lessor and each of the other Indemnified Parties from and
against all damages, losses, claims, liabilities, obligations, penalties, causes
of action, costs and expenses (including, without limitation, attorneys' fees,
court costs and other expenses of litigation) suffered by, or claimed or
asserted against, the Lessor or any of the other Indemnified Parties, directly
or indirectly, based on, arising out of or resulting from (a) the use and
occupancy of the Leased Property or any business conducted therein, (b) any act,
fault, omission to act or misconduct by the Lessee or any employee, agent,
licensee, business invitee, guest, customer, contractor or sublessee of the
Lessee, relating to the Leased Property, (c) any accident, injury or damage
whatsoever caused to any Person, including, without limitation, any claim of
malpractice, or to the property of any Person in or about the Leased Property or
outside of the Leased Property where such accident, injury or damage results or
is claimed to have


                                       50

<PAGE>


resulted from any act, fault, omission to act or misconduct by of the Lessee or
any employee, agent, licensee, contractor or sublessee of the Lessee, (d) any
Lease Default, (e) any attempt by the Lessee to transfer or relocate any of the
Permits to any location other than the Leased Property and/or (f) the
enforcement of this indemnity. Any amounts which become payable by the Lessee
under this Section 12.2.1 shall be a demand obligation of the Lessee to the
Lessor, payable as an Additional Charge. The indemnity provided for in this
Section 12.2.1 shall survive any termination of this Lease.

         12.2.2 Indemnified Parties. As used in this Lease the term "Indemnified
Parties" shall mean Lessor, any Fee Mortgagee and their respective successors,
assigns, employees, servants, agents, attorneys, officers, directors,
shareholders, partners and owners.

         12.2.3 Limitation on Lessor Liability. The Lessor shall not be liable
to any member of the Leasing Group or any Affiliate of any member of the Leasing
Group, or to any other Person whatsoever for any damage, injury, loss,
compensation, or claim (including, but not limited to, any claim for the
interruption of or loss to any business conducted on the Leased Property) based
on, arising out of or resulting from any cause whatsoever, including, but not
limited to, the following: (a) repairs to the Leased Property, (b) interruption
in use of the Leased Property; (c) any accident or damage resulting from the use
or operation of the Leased Property or any business conducted thereon; (d) the
termination of this Lease by reason of Casualty or Condemnation, (e) any fire,
theft or other casualty or crime, (f) the actions, omissions or misconduct of
any other Person, (g) damage to any property, or (h) any damage from the flow or
leaking of water, rain or snow. All Tangible Personal Property and the personal
property of any other Person on the Leased Property (including, without
limitation, the Lessor's Personal Property) shall be at the sole risk of the
Lessee and the Lessor shall not in any manner be held responsible therefor.
Notwithstanding the foregoing, the Lessor shall not be released from liability
for any injury, loss, damage or liability suffered directly by the Lessee to the
extent caused directly by the gross negligence or willful misconduct of the
Lessor, its servants, employees or agents acting within the scope of their
authority on or about the Leased Property or in regards to the Lease; provided,
however, that in no event shall the Lessor, its servants, employees or agents
have any liability based on any loss with respect to or interruption in the
operation of any business at the Leased Property or for any indirect or
consequential damages.

         12.2.4 Risk of Loss. During the Term of this Lease, the risk of loss or
of decrease in the enjoyment and beneficial use of the Leased Property in
consequence of any damage or destruction thereof by fire, the elements,
casualties, thefts, riots, wars or otherwise, or in consequence of foreclosures,
levies or executions of Liens (other than those created by the Lessor in
accordance with the provisions of Article 20) is assumed by the Lessee and, in
the absence of the gross negligence or willful misconduct as set forth in
Section 12.2.3, the Lessor shall in no event be answerable or accountable
therefor (except for the obligation to account for insurance proceeds and Awards
to the extent provided for in Articles 13 and 14) nor shall any of the events
mentioned in this Section entitle the Lessee to


                                       51

<PAGE>


any abatement of Rent (except for an abatement, if any, as specifically provided
for in Section 3.6).


                                   ARTICLE 13
                                   ----------

                                FIRE AND CASUALTY
                                -----------------

         13.1 Restoration Following Fire or Other Casualty.

         13.1.1 Following Fire or Casualty. In the event of any damage or
destruction to the Leased Property by reason of fire or other hazard or
casualty, including, without limitation, any occurrence which, without the fault
or neglect of the Lessee renders the Leased Premises untentable or unfit for
occupancy (any such damage or destruction is referred to herein as a
"Casualty"), the Lessee shall give immediate written notice thereof to the
Lessor and any Fee Mortgagee and, subject to the terms of this Article 13 and
any applicable Fee Mortgage Loan Documents, the Lessee shall proceed with
reasonable diligence, in full compliance with all applicable Legal Requirements,
to perform such repairs, replacement and reconstruction work (referred to herein
as the "Work") to restore the Leased Property to the condition it was in
immediately prior to such damage or destruction and to a condition adequate to
operate the Facility for the Primary Intended Use and in compliance with Legal
Requirements and any applicable Fee Mortgage Loan Documents. All Work shall be
performed and completed in accordance with all Legal Requirements and the other
requirements of this Lease within one hundred and twenty (120) days following
the occurrence of the damage or destruction plus a reasonable time to compensate
for Unavoidable Delays (including for the purposes of this Section, delays in
obtaining Permits and in adjusting insurance losses), but in no event beyond
three-hundred and sixty-five (365) days following the occurrence of the
Casualty.

         13.1.2 Procedures. In the event that any Casualty results in
non-structural damage to the Leased Property in excess of ONE HUNDRED THOUSAND
DOLLARS ($100,000) or in any structural damage to the Leased Property,
regardless of the extent of such structural damage, prior to commencing the
Work, the Lessee shall comply with the requirements of any applicable Fee
Mortgage Loan Documents and the following requirements:

         (a) The Lessee shall furnish to the Lessor complete plans and
specifications for the Work (collectively, the "Plans and Specifications"), for
the Lessor's approval, in each instance, which approval shall not be
unreasonably withheld. The Plans and Specifications shall bear the signed
approval thereof by an architect, licensed to do business in the State,
reasonably satisfactory to the Lessor and shall be accompanied by a written
estimate from the architect, bearing the architect's seal, of the entire cost of
completing the Work, and to the extent feasible, the Plans and Specifications
shall provide for Work of such nature, quality and extent, that, upon the
completion thereof, the Leased Property shall be at least equal in


                                       52

<PAGE>


value and general utility to its value and general utility prior to the Casualty
and shall be adequate to operate the Leased Property for the Primary Intended
Use;

         (b) The Lessee shall furnish to the Lessor certified or photostatic
copies of all Permits and Contracts required by all applicable Legal
Requirements in connection with the commencement and conduct of the Work;

         (c) The Lessee shall furnish to the Lessor a cash deposit or a payment
and performance bond sufficient to pay for completion of and payment for the
Work in an amount not less than the architect's estimate of the entire cost of
completing the Work, less the amount of property insurance proceeds, if any,
then held by the Lessor and which the Lessor shall be required to apply toward
restoration of the Leased Property as provided in Section 13.2. The Lessor may
also require the Lessee to furnish a mechanic's and materialman's lien payment
bond in compliance with A.R.S. ss.33-1003 and upon such terms and conditions as
the Lessor may reasonably require;

         (d) The Lessee shall furnish to the Lessor such insurance with respect
to the Work (in addition to the insurance required under Section 12.1 hereof) in
such amounts and in such forms as is reasonably required by the Lessee; and

         (e) The Lessee shall not commence any of the Work until the Lessee
shall have complied with the requirements set forth in clauses (a) through (d)
immediately above, as applicable, and, thereafter, the Lessee shall perform the
Work diligently, in a good and workmanlike fashion and in good faith in
accordance with (i) the Plans and Specifications referred to in clause (a)
immediately above, (ii) the Permits and Contracts referred to in clause (b)
immediately above and (iii) all applicable Legal Requirements and other
requirements of this Lease; provided, however, that in the event of a bona fide
emergency during which the Lessee is unable to contact the appropriate
representatives of the Lessor, the Lessee may commence such Work as may be
necessary in order to address such emergency without the Lessor's prior
approval, as long as the Lessee immediately thereafter advises the Lessor and
any applicable Fee Mortgagee of such emergency and the nature and scope of the
Work performed and obtains the Lessor's approval of the remaining Work to be
completed.

         13.1.3 Disbursement of Insurance Proceeds. Subject to the terms of any
applicable Fee Mortgage Loan Documents, if, as provided in Section 13.2, the
Lessor is required to apply any property insurance proceeds toward repair or
restoration of the Leased Property, then as long as the Work is being diligently
performed by the Lessee in accordance with the terms and conditions of this
Lease, the Lessor shall disburse such insurance proceeds from time to time
during the course of the Work in accordance with and subject to satisfaction of
the following provisions and conditions. The Lessor shall not be required to
make disbursements more often than at thirty (30) day intervals. The Lessee
shall submit a written request for each disbursement at least ten (10) Business
Days in advance and shall comply with the following requirements in connection
with each disbursement:


                                       53

<PAGE>


         (a) Prior to the commencement of any Work, the Lessee shall have
received the Lessor's and any applicable Fee Mortgagee's written approval (to
the extent that any such approval from such Fee Mortgagee is required under any
applicable Fee Mortgage Loan Documents) of the Plans and Specifications (which
approval shall not be unreasonably withheld) and the Work shall be supervised by
an experienced construction manager with the consultation of an architect or
engineer qualified and licensed to do business in the State.

         (b) Each request for payment shall be accompanied by (x) a certificate
of the architect or engineer, bearing the architect's or engineer's seal, and
(y) a certificate of the general contractor, qualified and licensed to do
business in the State, that is performing the Work (collectively, the "Work
Certificates"), each dated not more than ten (10) days prior to the application
for withdrawal of funds, and each stating:

                  (i) that all of the Work performed as of the date of the
certificates has been completed in compliance with the approved Plans and
Specifications, applicable Contracts and all applicable Legal Requirements;

                  (ii) that the sum then requested to be withdrawn has been paid
by the Lessee or is justly due to contractors, subcontractors, materialmen,
engineers, architects or other Persons, whose names and addresses shall be
stated therein, who have rendered or furnished certain services or materials for
the Work, and the certificate shall also include a brief description of such
services and materials and the principal subdivisions or categories thereof and
the respective amounts so paid or due to each of said Persons in respect thereof
and stating the progress of the Work up to the date of said certificate;

                  (iii) that the sum then requested to be withdrawn, plus all
sums previously withdrawn, does not exceed the cost of the Work insofar as
actually accomplished up to the date of such certificate;

                  (iv) that the remainder of the funds held by the Lessor will
be sufficient to pay for the full completion of the Work in accordance with the
Plans and Specifications;

                  (v) that no part of the cost of the services and materials
described in the applicable Work Certificate has been or is being made the basis
of the withdrawal of any funds in any previous or then pending application; and

                  (vi) that, except for the amounts, if any, specified in the
applicable Work Certificate to be due for services and materials, there is no
outstanding indebtedness known, after due inquiry, which is then due and payable
for work, labor, services or materials in connection with the Work which, if
unpaid, might become the basis of a vendor's, mechanic's, laborer's or
materialman's statutory or other similar Lien upon the Leased Property.


                                       54

<PAGE>


         (c) The Lessee shall deliver to the Lessor satisfactory evidence that
the Leased Property and all materials and all property described in the Work
Certificates are free and clear of Liens, except (i) Liens, if any, securing
indebtedness due to Persons (whose names and addresses and the several amounts
due them shall be stated therein) specified in an applicable Work Certificate,
which Liens shall be discharged upon disbursement of the funds then being
requested, (ii) any Fee Mortgage and (iii) the Permitted Encumbrances. The
Lessor shall accept as satisfactory evidence of the foregoing lien waivers in
customary form from the general contractor and all subcontractors performing the
Work, together with an endorsement of its title insurance policy (relating to
the Leased Property) in form acceptable to the Lessor, dated as of the date of
the making of the then current disbursement, confirming the foregoing.

         (d) If the Work involves alteration or restoration of the exterior of
any Leased Improvement that changes the footprint of any Leased Improvement, the
Lessee shall deliver to the Lessor, upon the request of the Lessor, an
"as-built" survey of the Leased Property dated as of a date within ten (10) days
prior to the making of the first and final advances (or revised to a date within
ten (10) days prior to each such advance) showing no encroachments other than
such encroachments, if any, by the Leased Improvements upon or over the
Permitted Encumbrances as are in existence as of the date hereof.

         (e) Prior to the first advance, the Lessee shall deliver to the Lessor
(i) architect's certificate (satisfactory to the Lessor both as to the architect
and as to the form of the certificate) that all necessary Permits for the
repair, replacement and/or restoration of the Leased Property have been obtained
and that the Leased Property, if repaired, replaced or rebuilt in accordance, in
all material respects, with the approved Plans and Specifications and such
Permits, shall comply with all applicable Legal Requirements and (ii) an
architect's certificate (satisfactory to the Lessor both as to the architect and
as to the form of the certificate) prior to the final advance, certifying that
the Leased Property was repaired, replaced or rebuilt in accordance, in all
material respects, with the approved Plans and Specifications and complies with
all applicable Legal Requirements, including, without limitation, all Permits
referenced in the foregoing clause (i). To the extent required under applicable
Fee Mortgage Loan Documents, such architect's certificates shall be certified to
the applicable Fee Mortgagee.

         (f) There shall be no Lease Default or any state of facts or
circumstance existing which, with the giving of notice and/or the passage of
time, would constitute any Lease Default.

The Lessor, at its option, may waive any of the foregoing requirements in whole
or in part in any instance. Upon compliance by the Lessee with the foregoing
requirements (except for such requirements, if any, as the Lessor may have
expressly elected to waive), and to the extent of (x) the insurance proceeds, if
any, which the Lessor may be required to apply to restoration of the Leased
Property pursuant to the provisions of this Lease and (y) all other cash
deposits made by the Lessee, the Lessor shall make available for payment to the


                                       55

<PAGE>


Persons named in the Work Certificate the respective amounts stated in said
certificate(s) to be due, subject to a retention of ten percent (10%) as to all
hard costs of the Work (the "Retainage"). It is understood that the Retainage is
intended to provide a contingency fund to assure the Lessor that the Work shall
be fully completed in accordance with the Plans and Specifications and the
requirements of the Lessor. Upon the full and final completion of all of the
Work in accordance with the provisions hereof, the Retainage shall be made
available for payment to those Persons entitled thereto.

Upon completion of the Work, and as a condition precedent to making any further
advance, in addition to the requirements set forth above, the Lessee shall
promptly deliver to the Lessor:

         (i) written certificates of the architect or engineer, bearing the
architect's or engineer's seal, and the general contractor, certifying that the
Work has been fully completed in a good and workmanlike manner in material
compliance with the Plans and Specifications and all Legal Requirements;

         (ii) an endorsement of its title insurance policy (relating to the
Leased Property) in form reasonably acceptable to the Lessor insuring the Leased
Property against all mechanic's and materialman's liens accompanied by the final
lien waivers from the general contractor and all subcontractors;

         (iii) a certificate by the Lessee in form and substance reasonably
satisfactory to the Lessor, listing all costs and expenses in connection with
the completion of the Work and the amount paid by the Lessee with respect to the
Work; and

         (iv) a temporary certificate of occupancy (if obtainable) and all other
applicable Permits and Contracts (that have not previously been delivered to the
Lessor) issued by or entered into with any Governmental Authority with respect
to the Leased Property and the Primary Intended Use and by the appropriate Board
of Fire Underwriters or other similar bodies acting in and for the locality in
which the Leased Property is situated; provided, that within thirty (30) days
after completion of the Work, the Lessee shall obtain and deliver to the Lessor
a permanent certificate of occupancy for the Leased Property.

         Upon completion of the Work and delivery of the documents required
pursuant to the provisions of this Section 13.1, the Lessor shall pay the
Retainage to the Lessee or to those Persons entitled thereto and if there shall
be insurance proceeds or cash deposits, other than the Retainage, held by the
Lessor in excess of the amounts disbursed pursuant to the foregoing provisions,
then provided that no Lease Default has occurred and is continuing, nor any
state of facts or circumstances which, with the giving of notice and/or the
passage of time would constitute a Lease Default, the Lessor shall pay over such
proceeds or cash deposits to the Lessee.


                                       56

<PAGE>


         No inspections or any approvals of the Work during or after
construction shall constitute a warranty or representation by the Lessor, or any
of its agents or Consultants, as to the technical sufficiency, adequacy or
safety of any structure or any of its component parts, including, without
limitation, any fixtures, equipment or furnishings, or as to the subsoil
conditions or any other physical condition or feature pertaining to the Leased
Property. All acts, including any failure to act, relating to the Lessor are
performed solely for the benefit of the Lessor to assure the payment and
performance of the Lease Obligations and are not for the benefit of the Lessee
or the benefit of any other Person.

         13.2 Disposition of Insurance Proceeds.

         13.2.1 Proceeds To Be Released to Pay For Work. In the event of any
Casualty, except as provided for in Section 13.2.2, but, subject to the terms of
any applicable Fee Mortgage Loan Documents, the Lessor shall release proceeds of
property insurance held by it to pay for the Work in accordance with the
provisions and procedures set forth in this Article 13, only if:

         (a) all of the terms, conditions and provisions of Sections 13.1 and
13.2.1 are satisfied;

         (b) there does not then exist any Lease Default or any state of facts
or circumstance which, with the giving of notice and/or the passage of time,
would constitute such a Lease Default;

         (c) the Lessee demonstrates to the Lessor's satisfaction that the
Lessee has the financial ability to satisfy the Lease Obligations during such
repair or restoration; and

         (d) no Sublease (excluding Resident Agreements) material to the
operation of the Facility immediately prior to such damage or taking shall have
been canceled or terminated, nor contain any still exercisable right to cancel
or terminate, due to such Casualty if and to the extent that the income from
such Sublease is necessary in order to avoid the violation of any of the
financial covenants set forth in this Lease or otherwise to avoid the creation
of an Event of Default.

         13.2.2 Proceeds Not To Be Released. If, as the result of any Casualty,
the Leased Property is damaged to the extent it is rendered Unsuitable For Its
Primary Intended Use and if either: (a) the Lessee, after exercise of diligent
efforts, cannot within a reasonable time (not in excess of ninety (90) days)
obtain all necessary Permits in order to be able to perform all required Work
and to again operate the Facility for its Primary Intended Use within three
hundred and sixty-five (365) days from the occurrence of the damage or
destruction in substantially the manner as immediately prior to such damage or
destruction or (b) such Casualty occurs during the last twenty-four (24) months
of the Term and would reasonably require more than nine (9) months to obtain all
Permits and complete the Work, then the Lessee may either (i) acquire the Leased
Property from the Lessor for a purchase


                                       57

<PAGE>


price equal to the Fair Market Value of the Leased Property minus the Fair
Market Added Value, with the Fair Market Value and the Fair Market Added Value
to be determined as of the day immediately prior to such Casualty and prior to
any other Casualty which has not been fully repaired, restored or replaced, in
which event, the Lessee shall be entitled, upon (x) payment of the full purchase
price and (y) an assumption by the Lessee of all of the Lessor's obligations
under all of the documents evidencing any Fee Mortgage Loan (including, without
limitation, if applicable, the HUD Financing Documents), together with a full
release of the Lessor (in form and substance acceptable to the Lessor) from all
obligations thereunder, provided, however, that, the provisions of this clause
(y) shall only apply in the event that the Lessee elects to assume the
obligations under any Fee Mortgage Loan, to receive (1) all property insurance
proceeds (less any costs and expenses incurred by the Lessor in collecting the
same) and (2) in the event that the Lessee has elected to assume the obligations
under any Fee Mortgage Loan, an assignment from the Lessor of all of its right,
title and interest to all amounts, if any, held in escrow by any applicable Fee
Mortgagee (including, without limitation, if applicable, any amounts held in the
HUD Escrow Accounts), or (ii) terminate this Lease, in which event (subject to
the provisions of the last sentence of this Section 13.2.2) the Lessor shall be
entitled to receive and retain the insurance proceeds; provided, however, that
the Lessee shall only have such right of termination effective upon payment to
the Lessor of all Rent and other sums due under this Lease and the other Lease
Documents through the date of termination plus an amount, which when added to
the sum of (1) the Fair Market Value of the Leased Property as affected by all
unrepaired or unrestored damage due to any Casualty (and giving due regard for
delays, costs and expenses incident to completing all repair or restoration
required to fully repair or restore the same) plus (2) the amount of insurance
proceeds actually received by the Lessor (net of costs and expenses incurred by
the Lessor in collecting the same) equals (3) the Fair Market Value of the
Leased Property minus the Fair Market Added Value, with the Fair Market Value
and the Fair Market Added Value to be determined as of the day immediately prior
to such Casualty and prior to any other Casualty which has not been fully
repaired. Any acquisition of the Leased Property pursuant to the terms of this
Section 13.2.2 shall be consummated in accordance with the provisions of Article
18, mutatis, mutandis. If such termination becomes effective, the Lessor shall
assign to the Lessee any outstanding insurance claims.

         13.2.3 Lessee Responsible for Short-Fall. If the cost of the Work
exceeds the amount of proceeds received by the Lessor from the property
insurance required under Article 12 (net of costs and expenses incurred by the
Lessor in collecting the same), the Lessee shall be obligated to contribute any
excess amount needed to repair or restore the Leased Property and pay for the
Work. Such amount shall be paid by the Lessee to the Lessor together with any
other property insurance proceeds for application to the cost of the Work.

         13.3 Tangible Personal Property. All insurance proceeds payable by
reason of any loss of or damage to any of the Tangible Personal Property shall
be paid to the Lessor as secured party, subject to the rights of the holders of
any Permitted Prior Security Interests,


                                       58

<PAGE>


and, thereafter, provided that no Lease Default, nor any fact or circumstance
which with the giving of notice and/or the passage of time could constitute a
Lease Default, has occurred and is continuing, the Lessor shall pay such
insurance proceeds to the Lessee to reimburse the Lessee for the cost of
repairing or replacing the damaged Tangible Personal Property, subject to the
terms and conditions set forth in the other provisions of this Article 13,
mutatis mutandis.

         13.4 Restoration of Certain Improvements and the Tangible Personal
Property. If the Lessee is required or elects to restore the Facility, the
Lessee shall either (a) restore (i) all alterations and improvements to the
Leased Property made by the Lessee and (ii) the Tangible Personal Property or
(b) replace such alterations and improvements and the Tangible Personal Property
with improvements or items of the same or better quality and utility in the
operation of the Leased Property.

         13.5 No Abatement of Rent. In no event shall any Rent abate or be
reduced as a result of any Casualty, including, without limitation, any
occurrence which without fault or neglect of the Lessee renders the Leased
Premises untentable or unfit for occupancy.

         13.6 Termination of Certain Rights. Any termination of this Lease
pursuant to this Article 13 shall cause any right of the Lessee to extend the
Term of this Lease, granted to the Lessee herein and any right of the Lessee to
purchase the Leased Property contained in this Lease to be terminated and to be
without further force or effect.

         13.7 Waiver. The Lessee hereby waives any statutory rights of
termination which may arise by reason of any damage or destruction to the Leased
Property due to any Casualty which the Lessee is obligated to restore or may
restore under any of the provisions of this Lease.

         13.8 Application of Rent Loss and/or Business Interruption Insurance.
Subject to the applicable provisions of any Fee Mortgage Loan Documents, all
proceeds of rent loss and/or business interruption insurance (collectively,
"Rent Insurance Proceeds") shall be paid to the Lessor and dealt with as
follows:

         (a) if the Work has been promptly and diligently commenced by the
Lessee and is in the process of being completed in accordance with this Lease
and no fact or condition exists which constitutes, or which with the giving of
notice and/or the passage of time would constitute, a Lease Default, the Lessor
shall each month pay to the Lessee out of the Rent Insurance Proceeds a sum
equal to that amount, if any, of the Rent Insurance Proceeds paid by the insurer
which is allocable to the rental loss and/or business interruption for the
preceding month minus an amount equal to the sum of the Rent due hereunder for
such month plus any Impositions relating to the Leased Property then due and
payable;

         (b) if the Work has not been promptly and diligently commenced by the
Lessee or is not in the process of being completed in accordance with this
Lease, the Rent Insurance


                                       59

<PAGE>


Proceeds shall be applied to any Rent then due, and, to the extent sufficient
therefor, an amount equal to Base Rent, Impositions and insurance premiums
payable for the next twelve (12) months, as reasonably projected by the Lessor,
shall be held by the Lessor as security for the Lease Obligations and applied to
the payment of Rent as it becomes due; and

         (c) if such Rent Insurance Proceeds received by the Lessor (net of
costs and expenses incurred by the Lessor in collecting the same) exceed the
amounts required under clauses (a) and (b) above, the excess shall be paid to
the Lessee, provided no fact or circumstance exists which constitutes, or with
notice, or passage of time, or both, would constitute, a Lease Default.

Notwithstanding the foregoing, the Lessor may at its option use or release the
Rent Insurance Proceeds to pay for the Work and, if a Lease Default exists, the
Lessor may apply all such insurance proceeds towards the Lease Obligations or
hold such proceeds as security therefor.

         13.9 Obligation To Account. Upon the Lessee's written request, which
may not be made not more than once in any three (3) month period, the Lessor
shall provide the Lessee with a written accounting of the application of all
insurance proceeds received by the Lessor.


                                   ARTICLE 14
                                   ----------

                                  CONDEMNATION
                                  ------------

         14.1 Parties' Rights and Obligations. If during the Term there is any
Taking of all or any part of the Leased Property or any interest in this Lease,
the rights and obligations of the parties shall be determined by this Article
14.

         14.2 Total Taking. If there is a permanent Taking of all or
substantially all of the Leased Property, this Lease shall terminate on the Date
of Taking.

         14.3 Partial or Temporary Taking. If there is a Permanent Taking of a
portion of the Leased Property, or if there is a temporary Taking of all or a
portion of the Leased Property, this Lease shall remain in effect so long as the
Leased Property is not thereby rendered permanently Unsuitable For Its Primary
Intended Use or temporarily Unsuitable For Its Primary Intended Use for a period
not likely to, or which does not, exceed three hundred and sixty-five (365)
days. If, however, the Leased Property is thereby so rendered permanently or
temporarily Unsuitable For Its Primary Intended Use: (a) the Lessee shall have
the right to restore the Leased Property, at its own expense, (subject to the
right under certain circumstances as provided for in Section 14.5 to receive the
net proceeds of an Award for reimbursement) to the extent possible, to
substantially the same condition as existed immediately before the partial or
temporary Taking or (b) the Lessee shall have the right to acquire the Leased
Property from the Lessor (i) upon payment of all Rent due


                                       60

<PAGE>


through the date that the purchase price is paid, for a purchase price equal to
the Fair Market Value of the Leased Property minus the Fair Market Added Value,
with the Fair Market Value of the Leased Property and the Fair Market Added
Value to be determined as of the day immediately prior to such partial or
temporary Taking, (ii) upon the assumption by the Lessee of all of the Lessor's
obligations under all of the documents evidencing any applicable Fee Mortgage
Loan (including, without limitation, if applicable, the HUD Financing
Documents), together with a full release (in form and substance acceptable to
the Lessor) of the Lessor from all obligations thereunder, but the provisions of
this clause (ii) shall apply only in the event that the Lessee has elected to
assume the obligations under any Fee Mortgage Loan and (iii) in accordance with
the terms and conditions set forth in Article 18; in which event, (x) the Lessor
shall assign to the Lessee all of the Lessor's right, title and interest in the
amounts, if any, then held in escrow by any applicable Fee Mortgagee (including,
without limitation, if applicable, any amounts held in the HUD Escrow Accounts)
if the Lessee has elected to assume the obligations under the applicable Fee
Mortgage Loan and (y) this Lease shall terminate upon payment of such purchase
price and the consummation of such acquisition. Notwithstanding the foregoing,
the Lessor may overrule the Lessee's election under clause (a) or (b) and
instead either (1) terminate this Lease as of the date when the Lessee is
required to surrender possession of the portion of the Leased Property so taken
or (2) compel the Lessee to keep the Lease in full force and effect and to
restore the Leased Property as provided in clause (a) above, but only if the
Leased Property may be operated for at least eighty percent (80%) of the
licensed unit capacity of the Facility if operated in accordance with its
Primary Intended Use. The Lessee shall exercise its election under this Section
14.3 by giving the Lessor notice thereof ("Lessee's Election Notice") within
sixty (60) days after the Lessee receives notice of the Taking. The Lessor shall
exercise its option to overrule the Lessee's election under this Section 14.3 by
giving the Lessee notice of the Lessor's exercise of its rights under Section
14.3 within thirty (30) days after the Lessor receives the Lessee's Election
Notice. If, as the result of any such partial or temporary Taking, this Lease is
not terminated as provided above, the Lessee shall be entitled to an abatement
of Rent, but only to the extent, if any, provided for in Section 3.6, effective
as of the date upon which the Leased Property is rendered Unsuitable For Its
Primary Intended Use.

         14.4 Restoration. If there is a partial or temporary Taking of the
Leased Property and this Lease remains in full force and effect pursuant to
Section 14.3, the Lessee shall accomplish all necessary restoration and the
Lessor shall release the net proceeds of such Award to reimburse the Lessee for
the actual reasonable costs and expenses thereof, subject to all of the
conditions and provisions set forth in Article 13 as though the Taking was a
Casualty and the Award was insurance proceeds. If the cost of the restoration
exceeds the amount of the Award (net of all reasonable costs and expenses
incurred in obtaining the Award), the Lessee shall be obligated to contribute
any excess amount needed to restore the Facility or pay for such costs and
expenses. To the extent that the cost of restoration is less than the amount of
the Award (net of all reasonable costs and expenses incurred in obtaining the
Award), the remainder of the Award shall be retained by the Lessor and Rent
shall be abated as set forth in Section 3.6.


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<PAGE>


         14.5 Award Distribution. In the event the Lessee completes the purchase
of the Leased Property, as described in Section 14.3, the entire Award shall,
upon payment of the purchase price and all Rent and other sums due under this
Lease and the other Lease Documents, belong to the Lessee and the Lessor agrees
to assign to the Lessee all of the Lessor's rights thereto. In any other event,
subject to the terms of any Fee Mortgage Loan Documents, the entire Award shall
belong to and be paid to the Lessor.

         14.6 Control of Proceedings. Subject to the rights of any Fee Mortgagee
under any applicable Fee Mortgage Loan Documents, unless and until the Lessee
completes the purchase of the Leased Property as provided in Section 14.3, all
proceedings involving any Taking and the prosecution of claims arising out of
any Taking against the Condemnor shall be conducted, prosecuted and settled by
the Lessor; provided, however, that the Lessor shall keep the Lessee apprised of
the progress of all such proceedings and shall solicit the Lessee's advice with
respect thereto and shall give due consideration to any such advice. In
addition, the Lessee shall reimburse the Lessor (as an Additional Charge) for
all costs and expenses, including reasonable attorneys' fees, appraisal fees,
fees of expert witnesses and costs of litigation or dispute resolution, in
relation to any Taking, whether or not this Lease is terminated.


                                   ARTICLE 15
                                   ----------

                               PERMITTED CONTESTS
                               ------------------

         15.1 Lessee's Right to Contest. To the extent of the express references
made to this Article 15 in other Sections of this Lease, but, subject to the
applicable provisions of any applicable Fee Mortgage Loan Documents, the Lessee,
any Sublessee or any Manager on their own or on the Lessor's behalf (or in the
Lessor's name), but at their sole cost and expense, may contest, by appropriate
legal proceedings conducted in good faith and with due diligence (until the
resolution thereof), the amount, validity or application, in whole or in part,
of any Imposition, Legal Requirement, the decision of any Governmental Authority
related to the operation of the Leased Property for its Primary Intended Use or
any Lien or claim relating to the Leased Property not otherwise permitted by
this Lease; provided, that (a) prior written notice of such contest is given to
the Lessor, (b) in the case of an unpaid Imposition, Lien or claim, the
commencement and continuation of such proceedings shall suspend the collection
thereof from the Lessor and/or compliance by any applicable member of the
Leasing Group with the contested Legal Requirement or other matter may be
legally delayed pending the prosecution of any such proceeding without the
occurrence or creation of any Lien, charge or liability of any kind against the
Leased Property, (c) neither the Leased Property nor any rent therefrom would be
in any immediate danger of being sold, forfeited, attached or lost as a result
of such proceeding, (d) in the case of a Legal Requirement, neither the Lessor
nor any member of the Leasing Group would be in any immediate danger of civil or
criminal liability for failure to comply therewith pending the outcome of such
proceedings, (e) in the event that any such contest shall involve a sum of money
or potential


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<PAGE>


loss in excess of FIFTY THOUSAND DOLLARS ($50,000), the Lessee shall deliver to
the Lessor an Officer's Certificate and opinion of counsel, if the Lessor deems
the delivery of an opinion to be appropriate, certifying or opining, as the case
may be, as to the validity of the statements set forth to the effect set forth
in clauses (b), (c) and (d), to the extent applicable, (f) the Lessee shall give
such cash security as may be demanded in good faith by the Lessor to insure
ultimate payment of any fine, penalty, interest or cost and to prevent any sale
or forfeiture of the affected portion of the Leased Property by reason of such
non-payment or non-compliance, (g) if such contest is finally resolved against
the Lessor or any member of the Leasing Group, the Lessee shall promptly pay, as
Additional Charges due hereunder, the amount required to be paid, together with
all interest and penalties accrued thereon and/or comply (and cause any
Sublessee and any Manager to comply) with the applicable Legal Requirement, and
(h) no state of facts or circumstance exists which constitutes, or with the
passage of time and/or the giving of notice, could constitute a Lease Default;
provided, however, the provisions of this Article 15 shall not be construed to
permit the Lessee to contest the payment of Rent or any other sums payable by
the Lessee to the Lessor under any of the Lease Documents.

         15.2 Lessor's Cooperation. The Lessor, at the Lessee's sole cost and
expense, shall execute and deliver to the Lessee such authorizations and other
documents as may reasonably be required in any such contest, so long as the same
does not expose the Lessor or any Fee Mortgagee to any civil or criminal
liability, and, if reasonably requested by the Lessee or if the Lessor so
desires, the Lessor shall join as a party therein.

         15.3 Lessee's Indemnity. The Lessee, as more particularly provided for
in Section 12.2, shall indemnify, defend (with counsel acceptable to the Lessor)
and save the Indemnified Parties harmless against any liability, cost or expense
of any kind, including, without limitation, attorneys' fees and expenses that
may be imposed upon the Lessor in connection with any such contest and any loss
resulting therefrom and in the enforcement of this indemnification.


                                   ARTICLE 16
                                   ----------

                                     DEFAULT
                                     -------

         16.1 Events of Default. Each of the following shall constitute an
"Event of Default" hereunder and shall entitle the Lessor to exercise its
remedies hereunder and under any of the other Lease Documents:

         (a) any failure of the Lessee to pay any amount due hereunder or under
any of the other Lease Documents within ten (10) days following the date when
such payment was due;

         (b) any failure in the observance or performance of any other covenant,
term, condition or warranty provided in this Lease or any of the other Lease
Documents, other


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<PAGE>


than the payment of any monetary obligation and other than as specified in
subsections (c) through (l) below (a "Failure to Perform"), continuing for
thirty (30) days after the giving of notice by the Lessor to the Lessee
specifying the nature of the Failure to Perform; except as to matters not
susceptible to cure within thirty (30) days, provided that with respect to such
matters, (i) the Lessee commences the cure thereof within thirty (30) days after
the giving of such notice by the Lessor to the Lessee, (ii) the Lessee
continuously prosecutes such cure to completion and (iii) such Failure to
Perform does not impair the value of, or the Lessor's rights with respect to,
the Leased Property;

         (c) the occurrence of any default or breach of condition continuing
beyond the expiration of the applicable notice and grace periods, if any, under
any of the other Lease Documents;

         (d) if any representation, warranty or statement contained herein or in
any of the other Lease Documents proves to be untrue in any material respect as
of the date when made or at any time during the Term if such representation or
warranty is a continuing representation or warranty pursuant to Section 10.2;

         (e) if the Lessee shall (i) voluntarily be adjudicated a bankrupt or
insolvent, (ii) seek or consent to the appointment of a receiver or trustee for
itself or for the Leased Property, (iii) file a petition seeking relief under
the bankruptcy or other similar laws of the United States, any state or any
jurisdiction, (iv) make a general assignment for the benefit of creditors, (v)
make or offer a composition of its debts with its creditors or (vi) be unable to
pay its debts as such debts mature;

         (f) if any court shall enter an order, judgment or decree appointing,
without the consent of the Lessee, a receiver or trustee for the Lessee and such
order, judgment or decree shall remain in force, undischarged or unstayed,
ninety (90) days after it is entered;

         (g) if a petition is filed against the Lessee which seeks relief under
the bankruptcy or other similar laws of the United States, any state or any
other jurisdiction, and such petition is not dismissed within ninety (90) days
after it is filed;

         (h) the liquidation, dissolution or termination of existence of the
Lessee or the merger or consolidation of the Lessee with any other Person;

         (i) subject to Section 19.4 hereof, if, without the prior written
consent of the Lessor, in each instance, which consent may be withheld by the
Lessor in its sole and absolute discretion, the Lessee's interest in the Leased
Property shall be, directly or indirectly, mortgaged, encumbered (by any
voluntary or involuntary Lien other than the Permitted Encumbrances), subleased,
sold, assigned, hypothecated or otherwise transferred (whether by operation of
law or otherwise);


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<PAGE>


         (j) except as a result of Casualty or a partial or complete
Condemnation, if the Lessee ceases operation of the Facility for a period in
excess of thirty (30) days;

         (k) if one or more judgments against the Lessee or attachments against
the Lessee's interest in the Leased Property, which in the aggregate exceed ONE
HUNDRED THOUSAND DOLLARS ($100,000) or which may materially and adversely
interfere with the operation of the Facility, remain unpaid, unstayed on appeal,
undischarged, unbonded or undismissed for a period of thirty (30) days; or

         (l) any failure to maintain the insurance required pursuant to Section
12 of this Lease in force and effect at all times until the Lease Obligations
are fully paid and performed.

         16.2 Remedies.

         (a) If any Lease Default shall have occurred, the Lessor may at its
option terminate this Lease by giving the Lessee not less than ten (10) Business
Days' notice of such termination, or exercise any one or more of its rights and
remedies under this Lease or any of the other Lease Documents, or as available
at law or in equity and upon the expiration of the time fixed in such notice,
the Term shall terminate (but only if the Lessor shall have specifically elected
by a written notice to so terminate the Lease) and all rights of the Lessee
under this Lease shall cease. Notwithstanding the foregoing, in the event of the
Lessee's failure to pay Rent, if such Rent remains unpaid beyond ten (10) days
from the due date thereof, the Lessor shall not be obligated to give ten (10)
Business Days' notice of such termination or exercise of any of its other rights
and remedies under this Lease, or the other Lease Documents, or otherwise
available at law or in equity, and the Lessor shall be at liberty to pursue any
one or more of such rights or remedies without further notice. No taking of
possession of the Leased Property by or on behalf of the Lessor, and no other
act done by or on behalf of the Lessor, shall constitute an acceptance of
surrender of the Leased Property by the Lessee or reduce the Lessee's
obligations under this Lease or the other Lease Documents, unless otherwise
expressly agreed to in a written document signed by an authorized officer or
agent of the Lessor.

         (b) To the extent permitted under applicable law, the Lessee shall pay
as Additional Charges all costs and expenses (including, without limitation,
attorneys' fees and expenses) reasonably incurred by or on behalf of the Lessor
as a result of any Lease Default.

         (c) If any Lease Default shall have occurred, whether or not this Lease
has been terminated pursuant to Paragraph (a) of this Section, the Lessee shall,
to the extent permitted under applicable law, if required by the Lessor so to
do, upon not less than ten (10) Business Days' prior notice from the Lessor,
immediately surrender to the Lessor the Leased Property pursuant to the
provisions of Paragraph (a) of this Section and quit the same, and the Lessor
may enter upon and repossess the Leased Property by reasonable force, summary
proceedings, ejectment or otherwise, and may remove the Lessee and all other
Persons and


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<PAGE>


any and all of the Tangible Personal Property from the Leased Property, subject
to the rights of any residents or patients of the Facility and any Sublessees
who are not Affiliates of the Lessee and to any requirements of applicable law,
or the Lessor may claim ownership of the Tangible Personal Property as set forth
in Section 5.2.3 hereof. The Lessor shall use reasonable, good faith efforts to
relet the Leased Property or otherwise mitigate damages suffered by the Lessor
as a result of the Lessee's breach of this Lease.

         (d) In addition to all of the rights and remedies of the Lessor set
forth in this Lease and the other Lease Documents, if the Lessee shall fail to
pay any rental or other charge due hereunder (whether denominated as Base Rent,
Additional Rent, Additional Charges or otherwise) within ten (10) days after
same shall have become due and payable, then and in such event the Lessee shall
also pay to the Lessor (i) a late payment service charge (in order to partially
defray the Lessor's administrative and other overhead expenses) equal to two
hundred-fifty ($250) dollars and (ii) to the extent permitted by applicable law,
interest on such unpaid sum at the Overdue Rate; it being understood, however,
that nothing herein shall be deemed to extend the due date for payment of any
sums required to be paid by the Lessee hereunder or to relieve the Lessee of its
obligation to pay such sums at the time or times required by this Lease.

         16.3 Damages. None of (a) the termination of this Lease pursuant to
Section 16.2, (b) the eviction of the Lessee or the repossession of the Leased
Property, (c) the failure or inability of the Lessor, notwithstanding reasonable
good faith efforts, to relet the Leased Property, (d) the reletting of the
Leased Property or (e) the failure of the Lessor to collect or receive any
rentals due upon any such reletting, shall relieve the Lessee of its liability
and obligations hereunder, all of which shall survive any such termination,
repossession or reletting. In any such event, the Lessee shall forthwith pay to
the Lessor all Rent due and payable with respect to the Leased Property to and
including the date of such termination, repossession or eviction. Thereafter,
the Lessee shall forthwith pay to the Lessor, at the Lessor's option, either:

         (i) the sum of: (x) all Rent that is due and unpaid at the later to
occur of termination, repossession or eviction, together with interest thereon
at the Overdue Rate to the date of payment, plus (y) the worth (calculated in
the manner stated below) of the amount by which the unpaid Rent for the balance
of the Term after the later to occur of the termination, repossession or
eviction exceeds the fair market rental value of the Leased Property for the
balance of the Term, plus (z) any other amount necessary to compensate the
Lessor for all damage proximately caused by the Lessee's failure to perform the
Lease Obligations or which in the ordinary course would be likely to result
therefrom; or

         (ii) each payment of Rent as the same would have become due and payable
if the Lessee's right of possession or other rights under this Lease had not
been terminated, or if the Lessee had not been evicted, or if the Leased
Property had not been repossessed which Rent, to the extent permitted by law,
shall bear interest at the Overdue Rate from the date when due until the date
paid, and the Lessor may enforce, by action or otherwise, any other


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<PAGE>


term or covenant of this Lease. There shall be credited against the Lessee's
obligation under this clause (ii) amounts actually collected by the Lessor from
another tenant to whom the Leased Property may have actually been leased or, if
the Lessor is operating the Leased Property for its own account, the actual net
cash flow of the Leased Property.

         In making the determinations described in subparagraph (i) above, the
"worth" of unpaid Rent shall be determined by a court having jurisdiction
thereof using the lowest rate of capitalization (highest present worth)
reasonably applicable at the time of such determination and allowed by
applicable law.

         16.4 Lessee Waivers. If this Lease is terminated pursuant to Section
16.2, the Lessee waives, to the extent not prohibited by applicable law, (a) any
right of redemption, re-entry or repossession, (b) any right to a trial by jury
in the event of summary proceedings to enforce the remedies set forth in this
Article 16, and (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt.

         16.5 Application of Funds. Any payments otherwise payable to the Lessee
which are received by the Lessor under any of the provisions of this Lease
during the existence or continuance of any Lease Default shall be applied to the
Lease Obligations in the order which the Lessor may reasonably determine or as
may be required by the laws of the State.

         16.6 Lessor's Right to Cure. If the Lessee shall fail to make any
payment, or to perform any act required to be made or performed under this Lease
and to cure the same within the relevant time periods provided in Section 16.1,
the Lessor, after five (5) Business Days' prior notice to the Lessee (except in
an emergency when such shorter notice shall be given as is reasonable under the
circumstances), and without waiving or releasing any obligation or Event of
Default, may (but shall be under no obligation to) at any time thereafter make
such payment or perform such act for the account and at the expense of the
Lessee, and may, to the extent permitted by law, enter upon the Leased Property
for such purpose and take all such action thereon as, in the Lessor's opinion,
may be necessary or appropriate therefor. No such entry shall be deemed an
eviction of the Lessee. All sums so paid by the Lessor and all costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses, in each case, to the extent permitted by law) so incurred shall be
paid by the Lessee to the Lessor on demand as an Additional Charge. The
obligations of the Lessee and rights of the Lessor contained in this Article
shall survive the expiration or earlier termination of this Lease.

         16.7 No Waiver By Lessor. The Lessor shall not by any act, delay,
omission or otherwise (including, without limitation, the exercise of any right
or remedy hereunder) be deemed to have waived any of its right or remedies
hereunder or under any of the other Lease Documents unless such waiver is in
writing and signed by the Lessor, and then, only to the extent specifically set
forth therein. No waiver at any time of any of the terms, conditions, covenants,
representations or warranties set forth in any of the Lease Documents
(including, without limitation, any of the time periods set forth therein for
the performance


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<PAGE>


of the Lease Obligations) shall be construed as a waiver of any other term,
condition, covenant, representation or warranty of any of the Lease Documents,
nor shall such a waiver in any one instance or circumstances be construed as a
waiver of the same term, condition, covenant, representation or warranty in any
subsequent instance or circumstance. No such failure, delay or waiver shall be
construed as creating a requirement that the Lessor must thereafter, as a result
of such failure, delay or waiver, give notice to the Lessee or any other Person
that the Lessor does not intend to, or may not, give a further waiver or to
refrain from insisting upon the strict performance of the terms, conditions,
covenants, representations and warranties set forth in the Lease Documents
before the Lessor can exercise any of its rights or remedies under any of the
Lease Documents or before any Lease Default can occur, or as establishing a
course of dealing for interpreting the conduct of and agreements between the
Lessor and the Lessee or any other Person.

         The acceptance by the Lessor of any payment that is less than payment
in full of all amounts then due under any of the Lease Documents at the time of
the making of such payment shall not: (a) constitute a waiver of the right to
exercise any of the Lessor's remedies at that time or at any subsequent time,
(b) constitute an accord and satisfaction or (c) nullify any prior exercise of
any remedy, without the express written consent of the Lessor. Any failure by
the Lessor to take any action under this Lease or any of the other Lease
Documents by reason of a default hereunder or thereunder, any acceptance of a
past due installment, or any indulgence granted from time to time shall not be
construed (i) as a novation of this Lease or any of the other Lease Documents,
(ii) as a waiver of any right of the Lessor thereafter to insist upon strict
compliance with the terms of this Lease or any of the other Lease Documents or
(iii) to prevent the exercise of any right of acceleration or any other right
granted hereunder or under applicable law; and to the maximum extent not
prohibited by applicable law, the Lessor hereby expressly waives the benefit of
any statute or rule of law or equity now provided, or which may hereafter be
provided, which would produce a result contrary to or in conflict with the
foregoing.

         16.8 Right of Forbearance. Whether or not for consideration paid or
payable to the Lessor and, except as may be otherwise specifically agreed to by
the Lessor in writing, no forbearance on the part of the Lessor, no extension of
the time for the payment of the whole or any part of the Lease Obligations, and
no other indulgence given by the Lessor to the Lessee or any other Person, shall
operate to release or in any manner affect the original liability of the Lessee
or such other Persons, or to limit, prejudice or impair any right of the Lessor,
including, without limitation, the right to realize upon any collateral, or any
part thereof, for any of the Lease Obligations evidenced or secured by the Lease
Documents; notice of any such extension, forbearance or indulgence being hereby
waived by the Lessee and all those claiming by, through or under the Lessee.

         16.9 Cumulative Remedies. The rights and remedies set forth under this
Lease are in addition to all other rights and remedies afforded to the Lessor
under any of the other Lease Documents or at law or in equity, all of which are
hereby reserved by the Lessor, and this Lease is made and accepted without
prejudice to any such rights and remedies. All of


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<PAGE>


the rights and remedies of the Lessor under each of the Lease Documents shall be
separate and cumulative and may be exercised concurrently or successively in the
Lessor's sole and absolute discretion.

                                   ARTICLE 17
                                   ----------

               SURRENDER OF LEASED PROPERTY OR LEASE; HOLDING OVER
               ---------------------------------------------------

         17.1 Surrender. The Lessee shall, upon the expiration or prior
termination of the Term (unless the Lessee has concurrently purchased the Leased
Property in accordance with the terms hereof), vacate and surrender the Leased
Property to the Lessor in good repair and condition, in compliance with all
Legal Requirements, all Insurance Requirements, and in compliance with the
provisions of Article 8, except for: (a) ordinary wear and tear (subject to the
obligation of the Lessee to maintain the Leased Property in good order and
repair during the entire Term of the Lease), (b) damage caused by the gross
negligence or willful acts of the Lessor, and (c) any damage or destruction
resulting from a Casualty or Taking that the Lessee is not required by the terms
of this Lease to repair or restore.

         17.2 Transfer of Permits and Contracts. In connection with the
expiration or any earlier termination of this Lease (unless the Lessee has
concurrently purchased the Leased Property in accordance with the terms hereof),
upon any request made from time to time by the Lessor, the Lessee shall (a)
promptly and diligently use commercially reasonable efforts to (i) transfer and
assign all Permits and Contracts necessary or desirable for the operation of the
Leased Property in accordance with its Primary Intended Lease to the Lessor or
its designee and/or (ii) arrange for the transfer or assignment of such Permits
and Contracts to the Lessor, any Fee Mortgagee or any of their respective
designees, all to the extent the same may be transferred or assigned under
applicable law and (b) cooperate in every respect (and to the fullest extent
possible) and assist the Lessor, any Fee Mortgagee or any such designee in
obtaining such Permits and Contracts (whether by transfer, assignment or
otherwise). Such efforts and cooperation on the part of the Lessee shall
include, without limitation, the execution, delivery and filing with appropriate
Governmental Authorities and Third Party Payors of any applications, petitions,
statements, notices, requests, assignments and other documents or instruments
reasonably requested by the Lessor, any Fee Mortgagee or any such designee.
Furthermore, the Lessee shall not take any action or refrain from taking any
action which would defer, delay or jeopardize the process of the Lessor, any Fee
Mortgagee or any such designee obtaining said Permits and Contracts (whether by
transfer, assignment or otherwise). Without limiting the foregoing, the Lessee
shall not seek to transfer or relocate any of said Permits or Contracts to any
location other than the Leased Property. The provisions of this Section 17.2
shall survive the expiration or earlier termination of this Lease.

         The Lessee hereby appoints the Lessor as its attorney-in-fact, with
full power of substitution to take such actions, in the event that the Lessee
fails to comply with any request made by the Lessor hereunder, as the Lessor (in
its sole absolute discretion) may deem


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<PAGE>


necessary or desirable to effectuate the intent of this Section 17.2. The power
of attorney conferred on the Lessor by the provisions of this Section 17.2,
being coupled with an interest, shall be irrevocable until the Lease Obligations
are fully paid and performed and shall not be affected by any disability or
incapacity which the Lessee may suffer and shall survive the same. Such power of
attorney is provided solely to protect the interests of the Lessor and shall not
impose any duty on the Lessor to exercise any such power and neither the Lessor
nor such attorney-in-fact shall be liable for any act, omission, error in
judgment or mistake of law, except as the same may result from its gross
negligence or willful misconduct.

         17.3 No Acceptance of Surrender. Except at the expiration of the Term
in the ordinary course, no surrender to the Lessor of this Lease or of the
Leased Property or any interest therein shall be valid or effective unless
agreed to and accepted in writing by the Lessor and no act by the Lessor or any
representative or agent of the Lessor, other than such a written acceptance by
the Lessor, shall constitute an acceptance of any such surrender.

         17.4 Holding Over. If, for any reason, the Lessee shall remain in
possession of the Leased Property after the expiration or any earlier
termination of the Term, such possession shall be as a tenant at sufferance
during which time the Lessee shall pay as rental each month, one and one-half
times the aggregate of (i) one-twelfth of the aggregate Base Rent and Additional
Rent payable at the time of such expiration or earlier termination of the Term;
(ii) all Additional Charges accruing during the month and (iii) all other sums,
if any, payable by the Lessee pursuant to the provisions of this Lease with
respect to the Leased Property. During such period of tenancy, the Lessee shall
be obligated to perform and observe all of the terms, covenants and conditions
of this Lease, but shall have no rights hereunder other than the right, to the
extent given by law to tenants at sufferance, to continue its occupancy and use
of the Leased Property. Nothing contained herein shall constitute the consent,
express or implied, of the Lessor to the holding over of the Lessee after the
expiration or earlier termination of this Lease.


                                   ARTICLE 18
                                   ----------

                         PURCHASE OF THE LEASED PROPERTY
                         -------------------------------

         18.1 Purchase of the Leased Property. In the event the Lessee purchases
the Leased Property from the Lessor pursuant to any of the terms of this Lease,
the Lessor shall, upon (a) receipt from the Lessee of the applicable purchase
price, together with full payment of any unpaid Rent due and payable with
respect to any period ending on or before the date of the purchase and (b) if
the Lessee so elects, the assumption by Lessee of all obligations under all of
the documents evidencing any Fee Mortgage Loan (including, without limitation,
if applicable, the HUD Financing Documents), together with a full release (in
form and substance acceptable to Lessor) of Lessor from all obligations
thereunder, deliver to the Lessee (i) a deed with covenants only against acts of
the Lessor conveying the entire interest


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<PAGE>


of the Lessor in and to the Leased Property to the Lessee subject to all Legal
Requirements, all of the matters described in clauses (a), (b), (e) and (g) of
Section 11.4.2, Impositions, any Liens created by the Lessee, any Liens created
in accordance with the terms of this Lease or consented to by the Lessee, the
claims of all Persons claiming by through or under the Lessee, any other matters
assented to by the Lessee and all matters for which the Lessee has
responsibility under any of the Lease Documents, but otherwise not subject to
any other Lien created by the Lessor from and after the Commencement Date (other
than an Encumbrance permitted under Article 20 which the Lessee elects to
assume) and (ii) if the Lessee has elected to assume any Fee Mortgage Loan, an
assignment from the Lessor of all of its right, title and interest to all
amounts, if any, then held in escrow by the applicable Fee Mortgagee (including,
without limitation, all amounts, if applicable, held in the HUD Escrow
Accounts). The applicable purchase price shall be paid in cash to the Lessor, or
as the Lessor may direct, in federal or other immediately available funds except
as otherwise mutually agreed by the Lessor and the Lessee. Each party shall pay
all of the expenses incurred by it in connection with any such conveyance. All
recording and transfer taxes and recording fees and other similar charges shall
be split equally between the Lessor and the Lessee.

         Notwithstanding anything to the contrary set forth herein, in no event
shall the Lessee be obligated to assume any Fee Mortgage Loan and, in the event
that the Lessee does not elect to assume any Fee Mortgage Loan, the Lessor shall
pay all amounts outstanding under all applicable Fee Mortgage Loans so as to be
able to transfer the Leased Property to the Lessee free and clear of all liens
securing any Fee Mortgage Loan.

         18.2 Appraisal.

         18.2.1 Designation of Appraisers. In the event that it becomes
necessary to determine the Fair Market Value of the Leased Property for any
purpose of this Lease, the party required or permitted to give notice of such
required determination shall include in the notice the name of a Person selected
to act as appraiser on its behalf. Within ten (10) days after receipt of any
such notice, the Lessor (or the Lessee, as the case may be) shall by notice to
the Lessee (or the Lessor, as the case may be) appoint a second Person as
appraiser on its behalf.

         18.2.2 Appraisal Process. The appraisers thus appointed, each of whom
must be a member of the American Institute of Real Estate Appraisers (or any
successor organization thereto), shall, within forty-five (45) days after the
date of the notice appointing the first appraiser, proceed to appraise the
Leased Property to determine the Fair Market Value of the Leased Property as of
the relevant date (giving effect to the impact, if any, of inflation from the
date of their decision to the relevant date); provided, however, that if only
one appraiser shall have been so appointed, or if two appraisers shall have been
so appointed but only one such appraiser shall have made such determination
within fifty (50) days after the making of the Lessee's or the Lessor's request,
then the determination of such appraiser shall be final and binding upon the
parties. If two appraisers shall have been appointed and


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<PAGE>


shall have made their determinations within the respective requisite periods set
forth above and if the difference between the amounts so determined shall not
exceed ten per cent (10%) of the lesser of such amounts, then the Fair Market
Value of the Leased Property shall be an amount equal to fifty percent (50%) of
the sum of the amounts so determined. If the difference between the amounts so
determined shall exceed ten percent (10%) of the lesser of such amounts, then
such two appraisers shall have twenty (20) days to appoint a third appraiser,
but if such appraisers fail to do so, then either party may request the American
Arbitration Association or any successor organization thereto to appoint an
appraiser within twenty (20) days of such request, and both parties shall be
bound by any appointment so made within such twenty (20) day period. If no such
appraiser shall have been appointed within such twenty (20) days or within
ninety (90) days of the original request for a determination of Fair Market
Value of the Leased Property, whichever is earlier, either the Lessor or the
Lessee may apply to any court having jurisdiction to have such appointment made
by such court. Any appraiser appointed by the original appraisers, by the
American Arbitration Association or by such court shall be instructed to
determine the Fair Market Value of the Leased Property within thirty (30) days
after appointment of such Appraiser. The determination of the appraiser which
differs most in terms of dollar amount from the determinations of the other two
appraisers shall be excluded, and fifty percent (50%) of the sum of the
remaining two determinations shall be final and binding upon the Lessor and the
Lessee as the Fair Market Value of the Leased Property.

         18.2.3 Specific Enforcement and Costs. This provision for determination
by appraisal shall be specifically enforceable to the extent such remedy is
available under applicable law, and any determination hereunder shall be final
and binding upon the parties except as otherwise provided by applicable law. The
Lessor and the Lessee shall each pay the fees and expenses of the appraiser
appointed by it and each shall pay one-half of the fees and expenses of the
third appraiser and one-half of all other cost and expenses incurred in
connection with each appraisal.

         18.3 Lessee's Option to Purchase.

         18.3.1 Conditions to Option. On the conditions (which conditions the
Lessor may waive, at its sole option, by notice to the Lessee at any time) that
(a) at the time of exercise of the Purchase Option and on the applicable
Purchase Option Date, there then exists no Lease Default, nor any state of facts
or circumstance which constitutes, or with the passage of time and/or the giving
of notice, would constitute a Lease Default and (b) the Lessee strictly complies
with the provisions of this Section 18.3, then the Lessee shall have the option
to purchase the Leased Property, at the price and upon the terms hereinafter set
forth (the "Purchase Option").

         18.3.2 Exercise of Option. The Purchase Option shall permit the Lessee
to purchase the Leased Property (a) on the last day of the Initial Term or (b)
on the last day of any Extended Term effectively exercised by the Lessee (each
of such dates are referred to herein as a "Purchase Option Date") and shall be
exercised by notice given by the Lessee to


                                       72

<PAGE>


the Lessor (the "Lessee's Purchase Option Notice") at least one hundred eighty
(180) days (but not more than two hundred seventy (270) days) prior to the
relevant Purchase Option Date. Once given, the Lessee shall have no right to
rescind the Lessee's Purchase Option Notice.

         18.3.3 Conveyance. If the Purchase Option is exercised by the Lessee in
accordance with the terms hereof, the Leased Property shall be conveyed by a
good and sufficient deed with covenants only against acts of the Lessor (the
"Deed") running to the Lessee or to such grantee as the Lessee may designate by
notice to the Lessor at least seven (7) days before the Time of Closing.

         18.3.4 Calculation of Purchase Price. The price to be paid by the
Lessee for the acquisition of the Leased Property pursuant to this Purchase
Option (the "Purchase Price") shall be equal to the lesser of (i) the then Fair
Market Value of the Leased Property minus the Fair Market Added Value and (ii)
an amount equal to the product of eight and one-half (8 1/2) multiplied by the
then trailing twelve (12) month Cash Flow (computed with respect to the twelve
month period ending on the last day of the last calendar month prior to the
calendar month in which the Closing occurs).

         18.3.5 Payment of Purchase Price. The Purchase Price shall be paid by
the Lessee at the Time of Closing by certified, cashier's, treasurer's or bank
check(s) or wire transfer pursuant to instructions received from the Lessor.

         18.3.6 Place and Time of Closing. If the Purchase Option is exercised,
the closing shall occur and the Deed shall be delivered (the "Closing") at the
office of the Lessor at 12:00 o'clock noon (E.S.T.) on the applicable Purchase
Option Date (such time, as the same may be extended by mutual written agreement
of the Lessor and the Lessee, being hereinafter referred to as the "Time of
Closing"). It is agreed that time is of the essence of the Purchase Option.

         18.3.7 Condition of Leased Property. The Leased Property is to be
purchased "AS IS" and "WHERE IS" as of the Time of Closing.

         18.3.8 Quality of Title. If the Lessor shall be unable to give title or
to make conveyance, as stipulated in this Section 18.3, then, at the Lessor's
option, the Lessor shall use reasonable efforts to remove all defects in title
and the applicable Purchase Option Date and Time of Closing shall be extended
for period of thirty (30) days. The Lessor shall not be required to expend more
than FIFTY THOUSAND DOLLARS ($50,000) (inclusive of attorney's fees) in order to
have used "reasonable efforts."

         18.3.9 Lessor's Inability to Perform. If at the expiration of the
extended time the Lessor shall have failed so to remove any such defects in
title, then all other obligations of all parties hereto under Section 18.3 shall
cease and Section 18.3 shall be void and without recourse to the parties hereto.
Notwithstanding the foregoing, the Lessee shall


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<PAGE>


have the election, at either the original or extended Purchase Option Date and
Time of Closing, to accept such title as the Lessor can deliver to the Leased
Property in its then condition and to pay therefor the Purchase Price without
reduction, in which case the Lessor shall convey such title; provided, that, in
the event of such conveyance, if any portion of the Leased Property shall have
been taken by Condemnation prior to the applicable Purchase Option Date and Time
of Closing, the Lessor shall pay over or assign to the Lessee at the Time of
Closing, all Awards recovered on account of such Taking, less any amounts
reasonably expended by the Lessor in obtaining such Awards, or, to the extent
such Awards have not been recovered as of the applicable Purchase Option Date
and Time of Closing, the Lessor shall assign to the Lessee all its rights with
respect to any claim therefor.

         18.3.10 Merger by Deed. The acceptance of the Deed by the Lessee or the
grantee designated by the Lessee, as the case may be, shall be deemed to be a
full performance and discharge of every agreement and obligation to be performed
by the Lessor contained or expressed in this Lease.

         18.3.11 Use of Purchase Price to Clear Title. To enable the Lessor to
make conveyance as provided in this Section, the Lessor may, at the Time of
Closing, use the Purchase Price or any portion thereof to clear the title of any
Lien, provided that all instruments so procured are recorded contemporaneously
with the Closing or reasonable arrangements are made for a recording subsequent
to the Time of Closing in accordance with customary conveyancing practices.

         18.3.12 Lessee's Default. If the Lessee delivers the Lessee's Purchase
Option Notice and fails to consummate the purchase of the Leased Property in
accordance with the terms hereof for any reason other than the Lessor's willful
and unexcused refusal to deliver the Deed, (a) the Lessee shall thereafter have
no further right to purchase the Leased Property pursuant to this Section,
although this Lease shall otherwise continue in full force and effect and (b)
the Lessor shall have the right to sue for specific performance of the Lessee's
obligations to purchase the Leased Property provided such suit for specific
performance is commenced within one (1) year after the applicable Purchase
Option Date on which such sale was supposed to occur.


                                   ARTICLE 19
                                   ----------

                            SUBLETTING AND ASSIGNMENT
                            -------------------------

         19.1 Subletting and Assignment. The Lessee may not, without the prior
written consent of the Lessor and any Fee Mortgagee (if any such consent from
the Fee Mortgagee is required under the Fee Mortgage Loan Documents), which
consent may be withheld in the Lessor's or the Fee Mortgagee's sole and absolute
discretion, assign or pledge all or any portion of its interest in this Lease or
any of the other Lease Documents (whether by operation of law or otherwise) or
sublet all or any part of the Leased Property. For purposes


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<PAGE>


of this Section 19.1, but subject to Section 19.4 hereof, the term "assign"
shall be deemed to include, but not be limited to, any one or more sales,
pledges, hypothecations or other transfers (including, without limitation, any
transfer by operation of law) of more than fifty percent (50%), in the
aggregate, the capital stock of or partnership interest in the Lessee or sales,
pledges, hypothecations or other transfers (including, without limitation, any
transfer by operation of law) of the capital or the assets of the Lessee. Any
such assignment, pledge, sale, hypothecation or other transfer made without the
Lessor's consent shall be void and of no force and effect.

         19.2 Permitted Subleases. Notwithstanding anything to the contrary set
forth herein, the Lessee shall have the right to enter into Resident Agreements
without the prior consent of the Lessor and any Fee Mortgagee; provided,
however, that all such Resident Agreements shall comply with all of the terms
and conditions of the HUD Regulatory Agreement.

         19.3 Attornment. The Lessee shall insert in each Sublease approved by
the Lessor and any other Sublease that may be permitted hereunder, other than
Resident Agreements, provisions to the effect that (a) such Sublease is subject
and subordinate to all of the terms and provisions of this Lease and to the
rights of the Lessor hereunder, (b) in the event this Lease shall terminate
before the expiration of such Sublease, the Sublessee thereunder will, at the
Lessor's option, attorn to the Lessor and waive any right the Sublessee may have
to terminate the Sublease or to surrender possession thereunder, as a result of
the termination of this Lease and (c) in the event the Sublessee receives a
written notice from the Lessor stating that the Lessee is in default under this
Lease, the Sublessee shall thereafter be obligated to pay all rentals accruing
under said Sublease directly to the Lessor or as the Lessor may direct. All
rentals received from the Sublessee by the Lessor shall be credited against the
amounts owing by the Lessee under this Lease.

         19.4 Permitted Transfers. Notwithstanding anything to the contrary set
forth herein, the Lessee's legal or beneficial interest in this Lease or the
Leased Property and/or all of the outstanding capital stock of the Lessee may be
directly or indirectly transferred in connection with any merger of CareMatrix
with or into any other Person, any sale of all or substantially all of the
CareMatrix's assets or any transfer of all or substantially all of the
outstanding capital stock of the CareMatrix.


                                   ARTICLE 20
                                   ----------

                   TITLE TRANSFERS AND LIENS GRANTED BY LESSOR
                   -------------------------------------------

         20.1 No Merger of Title. There shall be no merger of this Lease or of
the leasehold estate created hereby with the fee estate in the Leased Property
by reason of the fact that the same Person may acquire, own or hold, directly or
indirectly (a) this Lease or


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<PAGE>


the leasehold estate created hereby or any interest in this Lease or such
leasehold estate and (b) the fee estate in the Leased Property.

         20.2 Transfers By Lessor. If the original Lessor named herein or any
successor in interest shall convey the Leased Property in accordance with the
terms hereof, other than as security for a debt, and the grantee or transferee
of the Leased Property shall expressly assume all obligations of the Lessor
hereunder arising or accruing from and after the date of such conveyance or
transfer, the original the Lessor named herein or the applicable successor in
interest so conveying the Leased Property shall thereupon be released from all
future liabilities and obligations of the Lessor under this Lease arising or
accruing from and after the date of such conveyance or other transfer as to the
Leased Property and all such future liabilities and obligations shall thereupon
be binding upon the new owner.

         20.3 Lessor May Grant Liens. Without the consent of the Lessee, but
subject to the terms and conditions set forth below in this Section 20.3, the
Lessor may, from time to time, directly or indirectly, create or otherwise cause
to exist any lien, encumbrance or title retention agreement upon the Leased
Property or any interest therein ("Encumbrance"), whether to secure any
borrowing or other means of financing or refinancing; provided, that, except as
may otherwise be expressly provided herein or in any Fee Mortgage Loan Documents
to which the Lessee is a party, the Lessee shall have no obligation to make
payments under such Encumbrances. The Lessee shall subordinate this Lease to the
lien of any such Encumbrance, on the condition that the beneficiary or holder of
such Encumbrance executes a non-disturbance agreement in conformity with the
provisions of Section 20.4. To the extent that any such Encumbrance or any other
Permitted Encumbrance consists of a mortgage or deed of trust on the Lessor's
interest in the Leased Property the same shall be referred to herein as a "Fee
Mortgage" and the holder thereof shall be referred to herein as a "Fee
Mortgagee".

         20.4 Subordination and Non-Disturbance. Concurrently with the execution
and delivery of any Fee Mortgage entered into after the date hereof, provided
that the Lessee executes and delivers an agreement of the type described in the
following paragraph, the Lessor shall obtain and deliver to the Lessee an
agreement by the holder of such Fee Mortgage, pursuant to which, (a) the
applicable Fee Mortgagee consents to this Lease and (b) agrees that,
notwithstanding the terms of the applicable Fee Mortgage held by such Fee
Mortgagee, or any default, expiration, termination, foreclosure, sale, entry or
other act or omission under or pursuant to such Fee Mortgage or a transfer in
lieu of foreclosure, (i) the Lessee shall not be disturbed in peaceful enjoyment
of the Leased Property nor shall this Lease be terminated or canceled at any
time, except in the event that the Lessor shall have the right to terminate this
Lease under the terms and provisions expressly set forth herein, (ii) the
Lessee's option to purchase the Leased Property pursuant to Articles 13, 14 and
18 of this Lease shall remain in force and effect pursuant to the terms hereof
and (iii) in the event that the Lessee elects its option to purchase the Leased
Property and performs all of its obligations hereunder in connection with any
such election, the holder of the Fee Mortgage shall release its Fee Mortgage
upon payment by the Lessee of the purchase price required


                                       76

<PAGE>


hereunder, provided, that (1) such purchase price is paid to the holder of the
Fee Mortgage, in the event that the Indebtedness secured by the applicable Fee
Mortgage is equal to or greater than the purchase price or (2) in the event that
the purchase price is greater than the Indebtedness secured by the Fee Mortgage,
a portion of the purchase price equal to the Indebtedness secured by the Fee
Mortgage is paid to the Fee Mortgagee and the remainder of the purchase price is
paid to the Lessor.

         At the request from time to time by any Fee Mortgagee, the Lessee shall
(a) subordinate this Lease and all of the Lessee's rights and estate hereunder
to the Fee Mortgage held by such Fee Mortgagee and (b) agree that the Lessee
will attorn to and recognize such Fee Mortgagee or the purchaser at any
foreclosure sale or any sale under a power of sale contained in any such Fee
Mortgage as the Lessor under this Lease for the balance of the Term then
remaining. To effect the intent and purpose of the immediately preceding
sentence, the Lessee agrees to execute and deliver such instruments in
recordable from as are reasonably requested by the Lessor or the applicable Fee
Mortgagee; provided, however, that any such Fee Mortgagee simultaneously
executes, delivers and records a written agreement of the type described in the
preceding paragraph.


                                   ARTICLE 21
                                   ----------

                               LESSOR OBLIGATIONS
                               ------------------

         21.1 Quiet Enjoyment. As long as the Lessee shall pay all Rent and all
other sums due under any of the Lease Documents as the same become due and shall
fully comply with all of the terms of this Lease and the other Lease Documents
and fully perform its obligations thereunder, the Lessee shall peaceably and
quietly have, hold and enjoy the Leased Property throughout the Term, free of
any claim or other action by the Lessor or anyone claiming by, through or under
the Lessor, but subject to the Permitted Encumbrances and such Liens as may
hereafter be consented to by the Lessee. No failure by the Lessor to comply with
the foregoing covenant shall give the Lessee any right to cancel or terminate
this Lease, or to fail to perform any other sum payable under this Lease, or to
fail to perform any other obligation of the Lessee hereunder. Notwithstanding
the foregoing, the Lessee shall have the right by separate and independent
action to pursue any claim it may have against the Lessor as a result of a
breach by the Lessor of the covenant of quiet enjoyment contained in this
Article 21.

         21.2 Memorandum of Lease. The Lessor and the Lessee shall, promptly
upon the request of either, enter into a short form memorandum of this Lease, in
form suitable for recording under the laws of the State, in which reference to
this Lease and all options contained herein shall be made. The Lessee shall pay
all recording costs and taxes associated therewith.


                                       77

<PAGE>


         21.3 Default by Lessor. The Lessor shall be in default of its
obligations under this Lease only if the Lessor shall fail to observe or perform
any term, covenant or condition of this Lease on its part to be performed and
such failure shall continue for a period of thirty (30) days after notice
thereof from the Lessee (or such shorter time as may be necessary in order to
protect the health or welfare of any patients or residents of the Facility or to
insure the continuing compliance of the Facility with the applicable Legal
Requirements), unless such failure cannot with due diligence be cured within a
period of thirty (30) days, in which case such failure shall not be deemed to
continue if the Lessor, within said thirty (30) day period, proceeds promptly
and with due diligence to cure the failure and diligently completes the curing
thereof. The time within which the Lessor shall be obligated to cure any such
failure shall also be subject to extension of time due to the occurrence of any
Unavoidable Delay.


                                   ARTICLE 22
                                   ----------

                                     NOTICES
                                     -------

         Any notice, request, demand, statement or consent made hereunder or
under any of the other Lease Documents shall be in writing and shall be deemed
duly given if personally delivered, sent by certified mail, return receipt
requested, or sent by a nationally recognized commercial overnight delivery
service with provision for a receipt, postage or delivery charges prepaid, and
shall be deemed given when so personally delivered or postmarked or placed in
the possession of such mail or delivery service and addressed as follows:

If to the Lessee:                   CareMatrix of the Inn at the Amethyst, Inc.
                                    197 First Avenue
                                    Needham Heights, Massachusetts 02194
                                    Attn: President

With copies to:                     CareMatrix of the Inn at the Amethyst, Inc.
                                    197 First Avenue
                                    Needham Heights, Massachusetts 02194
                                    Attn:  General Counsel

                                    and

                                    Nutter, McClennen & Fish, LLP
                                    One International Place
                                    Boston, MA  02110
                                    Attn:  Marianne Ajemian, Esq.



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<PAGE>


If to the Lessor:                   Ironwood Greens Limited Partnership II
                                    c/o Netwest Development Corporation
                                    2221 East Broadway, Suite 211
                                    Tucson, AZ  85719
                                    Attn:  Priscilla Kuhn

With copies to:                     Netwest Development Corporation
                                    2221 East Broadway Boulevard
                                    Suite 211
                                    Tucson, AZ 85719
                                    Attn:  Dee T. O'Neill, Esq.

                                    and

                                    Chancellor of Arizona, Inc.
                                    197 First Avenue
                                    Needham Heights, MA  02194
                                    Attn:  General Counsel

or such other address as the Lessor or the Lessee shall hereinafter from time to
time designate by a written notice to the others given in such manner. Any
notice given to the Lessee by the Lessor at any time shall not imply that such
notice or any further or similar notice was or is required.


                                   ARTICLE 23
                                   ----------

                              ENVIRONMENTAL MATTERS
                              ---------------------

         23.1 Maintenance of Leased Property. The Lessee covenants that, as long
as this Lease shall remain in force and effect, the Lessee:

                 (a) shall generate, store, transport, utilize, dispose of,
         manage, release or locate, any Hazardous Substances on, under or from
         the Leased Property in compliance with all applicable Environmental
         Laws and may permit the generation, storage, transportation,
         utilization, disposal, management, release or threat of release, or
         location of any Hazardous Substances on, under or from the Leased
         Property, but only in compliance with all applicable Environmental
         Laws; and

                 (b) shall not permit any Lien arising under or related to any
         of the Environmental Laws to attach to the Leased Property and remain
         undischarged or not adequately bonded to the reasonable satisfaction of
         the Lessor for more than sixty (60) days.


                                       79

<PAGE>



         In addition to all other covenants contained herein, the Lessee agrees
that the Leased Property shall be maintained in compliance with the
Environmental Laws and in compliance with any provisions set forth under any Fee
Mortgage Loan Documents pertaining to the generation, storage, transportation,
utilization, disposition, management or release of Hazardous Substances on,
under or from the Leased Property.

         23.2 Notice of Environmental Conditions. The Lessee shall provide the
Lessor and any Fee Mortgagee with immediate written notice: (a) upon the Lessee
becoming aware of (i) the presence of, any release or any threat of release of
any Hazardous Substances on, under or from the Leased Property (whether or not
caused by the Lessee) that is not in compliance with any Environmental Law and
(ii) any Environmental Enforcement Action instituted or threatened and (b) upon
receipt by the Lessee of any notice relating to the Leased Property or any
Hazardous Substance allegedly originating on, under or from the Leased Property,
from any Governmental Authority pursuant to any of the Environmental Laws.

         23.3 The Lessee's Agreement To Take Remedial Actions. Upon the Lessee
becoming aware of the presence of, any release, or any threat of release of any
Hazardous Substances on, under or from the Leased Property caused by the Lessee,
its officers, agents, employees, Sublessees, licensees, concessionaires and/or
invitees or any other occupant of the Leased Property during the term of this
Lease, the Lessee shall immediately take all such actions to arrange for the
assessment, monitoring, clean-up, containment, removal, remediation or
restoration of the Leased Property as are (a) required pursuant to and in
accordance with any of the Environmental Laws or Fee Mortgage Loan Documents
and/or (b) by any Governmental Authority.

         Upon the Lessee becoming aware of the presence of, any release, or any
threat of release of any Hazardous Substances on any Surrounding Property, but
only to the extent that the presence of any Hazardous Substances on the
Surrounding Property originated on, under or from the Leased Property and such
release or threat of release violates any Environmental Law and was caused by
the Lessee, its officers, agents, employees, Sublessees, licensees,
concessionaires and/or invitees or any other occupant of the Leased Property
during the term of this Lease, the Lessee shall immediately take all such
actions to arrange for the assessment, monitoring, clean-up, containment,
removal, remediation or restoration of the Surrounding Property, as are required
(a) pursuant to any of the Environmental Laws or Fee Mortgage Loan Documents
and/or (b) by any Governmental Authority.

         23.4 The Lessor's Rights To Inspect The Leased Property and Take
Remedial Actions. So long as this Lease shall remain in force and effect, the
Lessor and, subject to the terms of any applicable Fee Mortgage Loan Documents,
the applicable Fee Mortgagee shall have the right, but not the obligation, to
enter upon the Leased Property, to expend funds to:


                                       80

<PAGE>


                 (a) cause one or more environmental assessments of the Leased
         Property to be undertaken. Such environmental assessments may include,
         without limitation, (i) detailed visual inspections of the Leased
         Property, including, without limitation, all storage areas, storage
         tanks, drains, dry wells and leaching areas, (ii) the taking of soil
         and surface water samples, (iii) the performance of soil and ground
         water analyses and (iv) the performance of such other investigations or
         analyses as are necessary or appropriate and consistent with sound
         professional environmental engineering practice in order for the Lessor
         to obtain a complete assessment of the compliance of the Leased
         Property and the use thereof with all Environmental Laws and to make a
         determination as to whether there is any risk of contamination (x) to
         the Leased Property resulting from Hazardous Substances originating on,
         under or from any Surrounding Property or (y) to any Surrounding
         Property resulting from Hazardous Substances originating on, under or
         from the Leased Property;

                 (b) cure any breach of the conditions and covenants contained
         in this Article 23;

                 (c) take any actions as are necessary to (i) prevent the
         migration of Hazardous Substances on, under or from the Leased Property
         to any other property, (ii) clean-up, contain, remediate or remove any
         Hazardous Substances on, under or from any other property, which
         Hazardous Substances originated on, under or from the Leased Property
         or (iii) prevent the migration of any Hazardous Substances on, under or
         from any other property to the Leased Property;

                 (d) comply with, settle or otherwise satisfy any Environmental
         Enforcement Action (including, without limitation, the payment of any
         fines or penalties imposed by any Governmental Authority); and

                 (e) correct or abate any environmental condition on or under
         the Leased Property which could cause degradation, damage or injury to
         the Leased Property, any Surrounding Property or any Person.

         Any amounts paid or advanced by the Lessor (or any Fee Mortgagee) and
all costs and expenses incurred in connection with any action taken pursuant to
the terms of this Article 23 (including, without limitation, environmental
consultants' and experts' fees and expenses, reasonable attorneys' fees and
expenses, court costs and all costs of assessment, monitoring, clean-up,
containment, remediation, removal and restoration), shall be a demand obligation
of the Lessee to the Lessor, but only to the extent that such amounts paid or
advanced and cost and expenses incurred arose out of and/or relate to the
presence of, any release, or any threat of release of any Hazardous Substances
on, under or from the Leased Property caused by the Lessee, its officers,
agents, employees, Sublessees, licensees, concessionaires and/or invitees or any
other occupant of the Leased Property during the term of this Lease, and if such
sums are not paid within ten (10) days after demand, such sums


                                       81

<PAGE>


shall thereafter (to the extent permitted by applicable law) bear interest at
the Overdue Rate until the date of payment.

         The Lessor (or any Fee Mortgagee), by making any such payment or
incurring any such costs, shall be subrogated to all rights of the Lessee or any
other occupant of the Leased Property to seek reimbursement from any Person,
including, without limitation, any prior owner or operator of the Leased
Property, who may be a "responsible party" under any of the Environmental Laws,
in connection with the presence of Hazardous Substances on, under or from the
Leased Property.

         Any partial exercise by the Lessor (or any Fee Mortgagee) of any of the
rights and remedies set forth in this Article 23, including, without limitation,
any partial undertaking on the part of the Lessor (such Fee Mortgagee) to cure
any failure by the Lessee or the Leased Property (or any other occupant) to
comply with any of the Environmental Laws, shall not obligate the Lessor to
complete such actions taken or require the Lessor (or such Fee Mortgagee) to
expend further sums to cure such non-compliance.

         23.5 Environmental Indemnification. Without limiting any of the other
indemnity provisions set forth in this Lease, the Lessee shall and hereby agrees
to indemnify, exonerate, defend (with counsel acceptable to the Lessor) and hold
the Indemnified Parties harmless from and against any claim, liability, loss,
cost, damage or expense (including, without limitation, environmental
consultants' and experts' fees and expenses, reasonable attorneys' fees and
expenses, court costs and all costs of assessment, monitoring, clean-up,
containment, removal, remediation and restoration) arising out of or in
connection with (a) any breach of any of the conditions and covenants hereunder,
(b) the Lessor's exercise of any of its rights and remedies hereunder or (c) the
enforcement of the aforesaid indemnification agreement; excluding, however, with
respect to each Indemnification Party, any matters resulting from the Lessor's
gross negligence or willful misconduct of such Indemnified Party.
Notwithstanding the foregoing, the Lessor shall have the option of conducting
its defense with counsel of the Lessor's choice, but at the expense of the
Lessee as aforesaid.

         The matters covered by the foregoing indemnity with respect to any
property other than the Leased Property shall not include any costs incurred as
a result of the clean-up, containment, remediation or removal of Hazardous
Substances on, under or from such other property or the restoration thereof if
such Hazardous Substances did not originate on, under or from the Leased
Property. The Lessee acknowledges and agrees that its obligations pursuant to
the provisions hereof are in addition to any and all other legal liabilities and
responsibilities (at law or in equity) that the Lessee may otherwise have as an
"owner" or "operator" of the Leased Property or a "responsible party" within the
meaning of any of the Environmental Laws, as the case may be.

         23.6 Survival. The Lessee's liability for a breach of the provisions of
this Article shall survive any termination of this Lease.


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<PAGE>


                                   ARTICLE 24
                                   ----------

                            MISCELLANEOUS PROVISIONS
                            ------------------------

         24.1 Broker's Fee Indemnification. The Lessee shall and hereby agrees
to indemnify, defend (with counsel reasonably acceptable to the Lessor) and hold
the Lessor harmless from and against any and all claims for premiums or other
charges, finder's fees, taxes, brokerage fees or commissions and other similar
compensation due in connection with any of the transactions contemplated by the
Lease Documents. Notwithstanding the foregoing, the Lessor shall have the option
of conducting its own defense against any such claims with counsel of the
Lessor's choice, but at the expense of the Lessee, as aforesaid. This
indemnification shall include, without limitation, all attorneys' fees and
expenses and court costs reasonably incurred by the Lessor in connection with
the defense against any such claims and the enforcement of this indemnification
agreement and shall survive the termination of this Lease.

         24.2 No Joint Venture or Partnership. Neither anything contained in any
of the Lease Documents, nor the acts of the parties hereto, shall create, or be
construed to create, a partnership or joint venture between the Lessor and the
Lessee. The Lessee is not the agent or representative of the Lessor and nothing
contained herein or in any of the other Lease Documents shall make, or be
construed to make, the Lessor liable to any Person for goods delivered to the
Lessee, services performed with respect to the Leased Property at the direction
of the Lessee or for debts or claims accruing against the Lessee.

         24.3 Amendments, Waivers and Modifications. Except as otherwise
expressly provided for herein or in any other Lease Document, none of the terms,
covenants, conditions, warranties or representations contained in this Lease or
in any of the other Lease Documents may be renewed, replaced, amended, modified,
extended, substituted, revised, waived, consolidated or terminated except by an
agreement in writing signed by (a) all parties to this Lease or the other
applicable Lease Document, as the case may be, with regard to any such renewal,
replacement, amendment, modification, extension, substitution, revision,
consolidation or termination and (b) the Person against whom enforcement is
sought with regard to any waiver. The provisions of this Lease and the other
Lease Documents shall extend and be applicable to all renewals, replacements,
amendments, extensions, substitutions, revisions, consolidations and
modifications of any of the Lease Documents, the Management Agreements, the Fee
Mortgage Loan Documents, the Permits and/or the Contracts. References herein and
in the other Lease Documents to any of the Lease Documents, the Management
Agreements, the Fee Mortgage Loan Documents, the Permits and/or the Contracts
shall be deemed to include any renewals, replacements, amendments, extensions,
substitutions, revisions, consolidations or modifications thereof.

         Notwithstanding the foregoing, any reference contained in any of the
Lease Documents, whether express or implied, to any renewal, replacement,
amendment,


                                       83

<PAGE>


extension, substitution, revisions, consolidation or modification of any of the
Lease Documents or any Management Agreement, Permit and/or the Contract is not
intended to constitute an agreement or consent by the Lessor to any such
renewal, replacement, amendment, substitution, revision, consolidation or
modification; but, rather as a reference only to those instances where the
Lessor may give, agree or consent to any such renewal, replacement, amendment,
extension, substitution, revision, consolidation or modification as the same may
be required pursuant to the terms, covenants and conditions of any of the Lease
Documents.

         24.4 Captions and Headings. The captions and headings set forth in this
Lease and each of the other Lease Documents are included for convenience and
reference only, and the words contained therein shall in no way be held or
deemed to define, limit, describe, explain, modify, amplify or add to the
interpretation, construction or meaning of, or the scope or intent of, this
Lease, any of the other Lease Documents or any parts hereof or thereof.

         24.5 Time is of the Essence. Time is of essence of each and every term,
condition, covenant and warranty set forth herein and in the other Lease
Documents.

         24.6 Counterparts. This Lease may be executed in one or more
counterparts, each of which taken together shall constitute an original and all
of which shall constitute one and the same instrument.

         24.7 Entire Agreement. This Lease and the other Lease Documents set
forth the entire agreement of the parties with respect to the subject matter.

         24.8 WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY
APPLICABLE LAW, THE LESSOR AND THE LESSEE HEREBY MUTUALLY, KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT WHICH ANY PARTY HERETO MAY NOW OR
HEREAFTER HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THE LEASE OR ANY OF THE LEASE
DOCUMENTS. The Lessee hereby certifies that neither the Lessor nor any of the
Lessor's representatives, agents or counsel has represented expressly or
otherwise that the Lessor would not, in the event of any such suit, action or
proceeding seek to enforce this waiver to the right of trial by jury and
acknowledges that the Lessor has been induced by this waiver (among other
things) to enter into the transactions evidenced by this Lease and the other
Lease Documents and further acknowledges that the Lessee (a) has read the
provisions of this Lease, and in particular, the paragraph containing this
waiver, (b) has consulted legal counsel, (c) understands the rights that it is
granting in this Lease and the rights that it waiving in this paragraph in
particular and (d) makes the waivers set forth herein knowingly, voluntarily and
intentionally.


                                       84

<PAGE>


         24.9 Successors and Assigns. This Lease and the other Lease Documents
shall be binding and inure to the benefit of (a) upon the Lessee and the
Lessee's legal representatives and permitted successors and assigns and (b) the
Lessor and any other Person who may now or hereafter hold the interest of the
Lessor under this Lease and their respective successors and assigns.
Notwithstanding the foregoing, except as may be permitted pursuant to Article
19, the Lessee shall not assign any of its rights or obligations hereunder or
under any of the other Lease Documents without the prior written consent of the
Lessor, in each instance, which consent may be withheld in the Lessor's sole and
absolute discretion.

         24.10 No Third Party Beneficiaries. This Lease and the other Lease
Documents are solely for the benefit of the Lessor, its successors, assigns and
participants (if any), the Indemnified Parties, the Lessee, the other members of
the Leasing Group and their respective permitted successors and assigns, and,
except as otherwise expressly set forth in any of the Lease Documents, nothing
contained therein shall confer upon any Person other than such parties any right
to insist upon or to enforce the performance or observance of any of the
obligations contained therein. Without limiting the foregoing, it is
acknowledged and agreed that for such time as any Fee Mortgage may remain in
effect, it is intended that the applicable Fee Mortgagee holding such Fee
Mortgage be a third party beneficiary of the terms and conditions set forth
under this Lease and, from and after the exercise by such Fee Mortgagee of its
rights an remedies under any Fee Mortgage (or any assignment of leases and rents
granted by the Lessor to such Fee Mortgagee) in accordance with the terms
thereto, such Fee Mortgagee shall be entitled (subject to and in accordance with
the terms of any applicable Fee Mortgage Loan Documents) to enforce the terms
and conditions of this Lease to the fullest extent, and in all respects, as if
such Fee Mortgagee were a party hereto. Notwithstanding the foregoing, it is not
intended that any of the terms and conditions set forth herein expand or be
deemed to expand the benefits, rights and/or remedies of the Fee Mortgagee under
the Fee Mortgage Loan Documents beyond the terms and conditions set forth
therein other than providing to such Fee Mortgagee the Lessee's agreement to
terms and conditions set forth in such Fee Mortgage Loan Documents to the extent
that such terms and conditions relate to the Lessee and/or the Leased Property.
All conditions to the obligations of the Lessor to advance or make available
proceeds of insurance or Awards, or to release any deposits held for Impositions
or insurance premiums are imposed solely and exclusively for the benefit of the
Lessor, its successors and assigns and any Fee Mortgagee. No other Person shall
have standing to require satisfaction of such conditions in accordance with
their terms, and no other Person shall, under any circumstances, be a
beneficiary of such conditions, any or all of which may be freely waived in
whole or in part by the Lessor at any time, if, in the Lessor's sole and
absolute discretion, the Lessor deems it advisable or desirable to do so.

         24.11 Governing Law. This Lease shall be construed and the rights and
obligations of the Lessor and the Lessee shall be determined in accordance with
the laws of the State.

         The Lessee hereby consents to personal jurisdiction in the courts of
the State and the United States District Court for the District in which the
Leased Property is situated as well


                                       85

<PAGE>


as to the jurisdiction of all courts from which an appeal may be taken from the
aforesaid courts, for the purpose of any suit, action or other proceeding
arising out of or with respect to any of the Lease Documents, the negotiation
and/or consummation of the transactions evidenced by the Lease Documents, the
Lessor's relationship of any member of the Leasing Group in connection with the
transactions evidenced by the Lease Documents and/or the performance of any
obligation or the exercise of any remedy under any of the Lease Documents and
expressly waives any and all objections the Lessee may have as to venue in any
of such courts.

         24.12 General. Anything contained in this Lease to the contrary
notwithstanding, all claims against, and liabilities of, the Lessee or the
Lessor arising prior to any date of termination of this Lease or any of the
other Lease Documents shall survive such termination.

         If any provision of this Lease or any of the other Lease Documents or
any application thereof shall be invalid or unenforceable, the remainder of this
Lease or the other applicable Lease Document, as the case may be, and any other
application of such term or provision shall not be affected thereby.
Notwithstanding the foregoing, it is the intention of the parties hereto that if
any provision of any of this Lease is capable of two (2) constructions, one of
which would render the provision void and the other of which would render the
provision valid, then such provision shall be construed in accordance with the
construction which renders such provision valid.

         If any late charges provided for in any provision of this Lease or any
of the other Lease Documents are based upon a rate in excess of the maximum rate
permitted by applicable law, the parties agree that such charges shall be fixed
at the maximum permissible rate.

         In the event that any amounts payable hereunder by the Lessee
(including, without limitation, Additional Charges) are deemed to be interest
and/or in the nature of interest, the Lessee agrees to pay such amounts as a
contracted for rate of interest.

         The Lessee waives all presentments, demands for performance, notices of
nonperformance, protests, notices of protest, notices of dishonor, and notices
of acceptance and waives all notices of the existence, creation, or incurring of
new or additional obligations, except as to all of the foregoing as expressly
provided for herein.

         24.13 Consents. In the event that the Lessor's consent is required by
the terms hereof or of any other Lease Document for any purpose whatsoever, it
is understood and agreed that (a) the Lessor's consent shall be subject to the
consent of any Fee Mortgagee to the extent that such consent from any Fee
Mortgage is required under the terms of the applicable financing documents
(which consent the Lessor shall seek to obtain) and (b) notwithstanding anything
to the contrary set forth herein, it shall not be deemed unreasonable


                                       86

<PAGE>


for the Lessor to withhold its consent in any given circumstance based upon the
Lessor's inability to obtain any required consent from any Fee Mortgagee.

         24.14 HUD Regulatory Agreements. Notwithstanding any provision in this
Lease to the contrary, so long as the Primary HUD Insured Mortgage, the
Additional HUD Insured Mortgage and/ or the Secondary HUD Insured Mortgage
encumbers the Land and is insured or held by the Department or the HUD
Secretary, in the event there is a conflict between the terms of this Lease, on
the one hand, and the terms and conditions of the HUD Regulatory Agreements, on
the other hand, the terms and conditions of the HUD Regulatory Agreements shall
prevail.



                                       87

<PAGE>



         IN WITNESS WHEREOF, the parties have caused this Lease to be executed
and attested by their respective officers thereunto duly authorized.


WITNESSES:                        LESSEE:
----------                        -------

                                  CAREMATRIX OF THE INN AT THE
                                  AMETHYST, INC., a Delaware
                                  corporation



_________________________         By:_________________________________
Name:                                  Name:  James M. Clary, III
                                       Title: Executive Vice President

_________________________
Name:


WITNESSES:                        LESSOR:
----------                        -------

                                  DESERT AMETHYST PHASE II
                                  LIMITED PARTNERSHIP, an Arizona
                                  limited partnership

                                  By:  NETWEST DEVELOPMENT
                                       CORPORATION, an Arizona
                                       corporation, its sole general partner


_________________________         By:________________________________
Name:                                  Name:  Priscilla S. Kuhn
                                       Title: President

_________________________
Name:



                                       88

<PAGE>



STATE OF ARIZONA   )

County of PIMA           ) ss.

         The foregoing instrument was acknowledged before me this 25th day of
March, 1998, by Priscilla S. Kuhn, the President of NETWEST DEVELOPMENT
CORPORATION, an Arizona corporation, on behalf of the corporation, as General
Partner of DESERT AMETHYST PHASE II LIMITED PARTNERSHIP, an Arizona limited
partnership, on behalf of said partnership.

         In witness whereof, I have hereunto set my hand and official seal.


                                                     --------------------------
                                                            Notary Public

My commission expires:

----------------------



STATE OF ARIZONA )

County of PIMA         ) ss.

         The foregoing instrument was acknowledged before me this 25th day of
March, 1998, by JAMES M. CLARY, III, the Executive Vice President of CAREMATRIX
OF THE INN AT THE AMETHYST, INC. a Delaware corporation, on behalf of the
corporation.

         In witness whereof, I have hereunto set my hand and official seal.



                                                     --------------------------
                                                            Notary Public

My commission expires:

----------------------



                                       89

<PAGE>



                                    EXHIBIT A
                                    ---------

                          LEGAL DESCRIPTION OF THE LAND
                          -----------------------------

PARCEL NO. 1:
-------------

That portion of the East half of the East half of Section 33, Township 4 North,
Range 1 East of the Gila and Salt River Base and Meridian, Maricopa County,
Arizona, described as follows:

COMMENCING at the Northeast corner of said Section 33;
THENCE South 00(degree) 23' 11" East, along the East line of said Section 33, a
distance of 715.86 feet (715.83 feet, record);
THENCE South 89(degree) 32' 10" West a distance of 980.00 feet to the TRUE POINT
OF BEGINNING;
THENCE South 00(degree) 23' 11" East a distance of 685.91 feet;
THENCE South 89(degree) 32' 10" West a distance of 345.04 feet;
THENCE North 00(degree) 24' 40" West, along the West line of the East half of
the East half of said Section 33, a distance of 685.91 feet (685.88 feet,
record);
THENCE North 89(degree) 32' 10" East a distance of 345.34 feet to the TRUE POINT
OF BEGINNING.


PARCEL NO. 2:
-------------

An easement for ingress and egress, as created by instrument recorded in
Document No. 87-681099, records of Maricopa County, Arizona, over the following
described property:

That portion of the East half of the East half of Section 33, Township 4 North,
Range 1 East of the Gila and Salt River Base and Meridian, Maricopa County,
Arizona, described as follows:

COMMENCING at the Northeast corner of said Section 33;
THENCE South 00(degree) 23' 11" East, along the East line of said Section 33, a
distance of 1401.77 feet (1401.71 feet, record); 
THENCE South 89(degree) 32' 10" West a distance of 55.00 feet to the TRUE POINT
OF BEGINNING; THENCE South 89(degree) 32' 10" West a distance of 925.00 feet;
THENCE North 00(degree) 23' 11" West a distance of 36.00 feet; THENCE North
89(degree) 32' 10" East a distance of 830.00 feet;
THENCE Northeasterly a distance of 34.84 feet along the arc of a curve, said
curve being concave Northwesterly and having a radius of 56.24 feet;
THENCE North 54(degree) 06' 59" East a distance of 36.47 feet;
THENCE Northeasterly a distance of 34.84 feet along the arc of a curve, said
curve being concave Southeasterly and having a radius of 56.24 feet;


<PAGE>



THENCE South 00(degree) 23' 11" East a distance of 78.00 feet to the TRUE POINT
OF BEGINNING.


PARCEL NO. 3:
-------------

An easement for access, ingress, egress, closure, landscaping, fence
construction and extension and common wall use and maintenance, as created in
Instrument recorded in Document No. 88-588954, records of Maricopa County,
Arizona, over the following described property:

The North 43 feet of the East 5 feet of Lot 176; 
The East 5 feet of Lot 177; 
The East 5 feet of Lot 181;
The East 5 feet of Lot 182; 
The East 5 feet of Lot 184; and 
The South 79 feet of the East 5 feet of Lot 185, all of Sun City Unit
Fifty-Three, according to Book 189 of Maps, page 19, records of Maricopa County,
Arizona.

PARCEL NO. 4:
-------------

That portion of the East half of the East half of Section 33, Township 4 North,
Range 1 East of the Gila and Salt River Base and Meridian, Maricopa County,
Arizona, described as follows:

COMMENCING at the Northeast corner of said Section 33;
THENCE South 00(degree) 23' 11" East, along the East line of said Section 33, a
distance of 715.86 feet (715.83 feet record); 
THENCE South 89(degree) 32' 10" West a distance of 980.00 feet to the TRUE POINT
OF BEGINNING;
THENCE South 89(degree) 32' 10" West a distance of 345.34 feet; THENCE North
00(degree) 24' 40" West a distance of 1.00 feet;
THENCE North 89(degree) 32' 10" East a distance of 345.34 feet;
THENCE South 00(degree) 23' 11" East a distance of 1.00 feet to the TRUE POINT
OF BEGINNING.


<PAGE>



                                    EXHIBIT B
                                    ---------

                             PERMITTED ENCUMBRANCES
                             ----------------------


1.       Resident Agreements

2.       Inchoate or statutory liens for taxes not yet delinquent.

3.       Those matters listed on Schedule B-II to Leasehold Title Insurance
         Commitment No. 214652 issued to the Lessee by Transnation Title
         Insurance Company